Taking the plunge to buy a new home is one of the biggest decisions you’ll ever make in life. Of course, it’s a hectic process, but those who are financially organized and prepared will get through it more easily.
Before buying a home, it’s important to determine your long term goals and see how the ownership of a home fits into those goals.
Experts usually advise first-time buyers to find a home when they’re ready to settle down and need at a place to live for at least five years. Plus, it helps to be financially ready when making this move.
If you’re unsure about the specifics of buying a first-time house, here is a simple home buyers guide to help with that.
1. Financial Readiness Is Important
Before house hunting, find out how much a lender will be willing to give you to purchase your first home. Some factors that will affect your mortgage include job history, monthly income, and current debts.
Also, you need to clarify how much you can afford when applying for a mortgage. The lender will require you to have a good credit score and a history of making timely bill payments.
Typically, getting pre-approved for a loan is important before placing an offer on a potential home.
2. Finding a Home
First, identify the location where you would like to live. Checking the prices of comparable homes in that particular area helps to get an idea of the potential monthly mortgage payments.
Consider getting the help of a real estate agent to help with the search, especially if you don’t much about the area. It’s not advisable to walk into an open house without an agent. You should look for a house that you can add value to. This will boost your equity.
If the house meets those big requirements, such as size and location, it’s never advisable to reject it due to a few physical flaws that can be fixed over time.
3. Home Inspection
When you finally have a few potential options, enlist the help of a home inspector to check the plumbing, flooring, roofing, walls, and basement of the home. Some homes might appear flawless but have several problems that a professional inspection will help to identify.
The overall safety, quality, and condition of a home are important. An inspection will help to know the possible repairs that a house needs if you settle for it. In some cases, it can give you a reason not to buy the home.
If the home needs repairs, a buyer can use this as a bargaining edge to get a discounted price or ask the seller to make the repairs.
4. Making an Offer and Closing
At this point, a professional real estate agent will help to determine the amount you should offer for the new house. The seller can accept or issue a counter-offer. Don’t be afraid to haggle with the seller to get a price you think it’s reasonable for the house.
Remember to factor in the closing costs (roughly 2 to 5 percent of the home price), immediate repairs, and commuting costs. The closing process involves signing a lot of paperwork, and a real estate agent serves as a home buyers guide to help you understand all the relevant details.
Getting a home appraisal and private mortgage insurance might also be necessary.
Home Buyers Guide – The Bottom Line
Buying a home can be an intimidating process for first-time homebuyers who are unsure about their options. As long as you have reasonable debts, a good credit score, and a solid job history, there are different conventional FHA VA loans you can qualify for.
Sometimes all it takes to get a new home is a preparedness and adequate due diligence. Calculate your debt-to-income ratio and factor in the down payment to determine how much you can afford to pay upfront every month.
When you’re ready, compare mortgage rates from different lenders, get pre-approved, and hit the market to find your new home.