Buying your first home can be challenging and a little intimidating. Should you grab the first house that you can afford, or is it better to just keep renting? There is a slight learning curve if you hope to become a homeowner for the first time, but smart planning and research can make the process easier for you so you are not left in the dark.
First Things First
How is your credit?
This is the first place to start. Your credit score is one of the most important factors in qualifying for a mortgage loan to get a sense of where you stand. There are several places where you can get a free credit report. Check your credit report over for any mistakes, unpaid accounts or collection accounts. Be aware of the amount of credit you are actually using relative to your available credit limit. Repairing damaged credit can take time, so start this process at least six months to a year before you start home shopping.
How much can you afford?
You'll need to have a good idea of what is coming in and what is going out every month in your household budget. Tracking income and spending for a couple months will give you a good idea of what you can comfortably afford for a mortgage payment. TIP: Have enough in your savings to cover at least six months of mortgage payments as an emergency fund for any of life's unexpected.
How much do you have saved for a down payment?
If you've been postponing buying your first home because you think you need a large down payment, I'm here to tell you that there are ways you can buy a home with little money down. Many lenders have first time home buyer programs that require little money down. There are also local grant programs that offer down payment assistance for a first time home buyer. So before you throw in the towel, talk to an experienced mortgage professional who can provide you with more information as far as which first time home buyer program is available for you.
How much can you qualify for?
This is a crucial step before beginning your home search. Consult with an experienced mortgage professional to find out the different types of mortgage programs they offer and how you can quality. Find out how much you can afford to borrow and get pre-approved. Lenders will consider how much other debt you have and how long you’ve been at your current job, in addition to your monthly income. Lenders typically want to see two recent pay stubs, the previous two years’ W-2s, tax returns and the past two months of your bank statements.
Ready to Look for a House?
Find an Experienced Real Estate Agent
A experienced real estate professional can help you find properties in your price range and market area. The process isn’t easy, and you will be glad to have a professional by your side to guide you through with making an offer, negotiating price, and working through the inspection. Find an agent who you like and who knows the market area well. Count on your agent’s expertise as a valuable asset as you make your first home purchase.
As you start looking at homes with your real estate agent -- there are a few questions you should be asking yourself; Where do you want to live? What style of home? Old or new? Ready-to-go or a fixer-upper? As you educate yourself on the market, your agent will help you narrow down your priorities and help you make an informed decision about your final choices.
Make an Offer
You've found the perfect home, now it's time to submit an offer. This is another area where your real estate agent is invaluable in negotiating for you. Your agent will help you decide whether or not you will go with the asking price. The offer will include conditions, or contingencies, necessary for the sale. These are items that must be satisfied within a set time frame for the sale to go through.
Congratulations! You did it!
Congratulations on becoming a new homeowner! The home is yours! You've taken the steps necessary to make your home buying experience a smooth one, and now you're no longer left in the dark.
Additional valuable resources:
- 7 Habits of Highly Effective Home Buyers by Bill Gassett
- Should I Buy or Rent My Next Place by Kevin Vitali
- A Millennial's Guide to Buying Your 1st Home by Wendy Weir
- Advice to Be Wild About While in the Midst of Buying Your First Home by Lynn Pineda
- Maintenance Tips for New Homeowners by Anita Clark
This Real Estate article "Don't Be Left in The Dark When Buying Your First Home" was written by: Maria Mastrolonardo. Maria is a Realtor with RE/MAX of Naperville, who has been selling Homes in the West Chicagoland area including Naperville, Wheaton, Lisle, Downers Grove, Aurora, and Winfield for 20+ years. Call or Text Maria at (630) 248-6077 or email her at firstname.lastname@example.org if you have any real estate related questions.