Buying your first home can be one of the most stressful events you’ll encounter if you don’t take the right precautions. There are countless things you need to prepare and keep in mind while searching out locations, agents, potential homes, mortgage lenders, and closing costs. It can all feel very overwhelming if you’re going in without any mental preparation, so here is our guide for the first time home buyer that will hopefully make this process easier.
First Time Home Buyer Guide
Location and Real Estate Agents
The first step is almost two steps in one. When looking for what area you are interested in living in, it’s pivotal to find a real estate agent that has experience with that area and can inform you on which neighborhoods are good and bad, what’s nearby, and what options will suit the amount of money you’re willing to pay. Finding a great real estate agent can be incredibly beneficial to getting you into a home quickly and effortlessly. They may even have connections with escrow officers and mortgage lenders that can assist you in buying your first home.
Understand Your Financial Position
This is something that many people don’t grasp well as first time home buyers. You have to understand what you’re financially capable of affording and that your dream home may be out of that range. Compromise is key here; consider calculating the down payment, closing costs, homeowner’s fees, insurance, and real estate taxes that you’ll have to pay and whether you have enough saved up for that cost. And just because the bank says you can take out a large loan doesn’t mean you should. You should also wait if you’re in the process of switching jobs or if you’re in an unstable job. It’s smarter to wait and build up your savings before getting too excited about getting into a new house.
Applying for a Mortgage
Some real estate agents will refuse to show you homes if you don’t have mortgage pre-approval. This means having a good credit score and steady income level that will prove you’re ready to own and maintain a home. There are many ways to be approved for mortgage even if you’re struggling financially, or dealing with bad credit. It’s also best to work with a mortgage company that is open to helping out the buyer and seller agent with your financial information so that your home buying process will go on without any bumps.
Making an Offer
As a first time home buyer, when you’ve finally found a home you’re interested in and you’re ready to put an offer down, you’ll have to work with your agent to put together a contract that will describe how much you’re willing to offer and if there are any things you would want the seller to cover such as damages. More than often, you can offer the amount that the house is appraised for, but when you are wanting to negotiate with a lower price you may have trouble. Sometimes using cash will get you a discount, but it doesn’t mean you get to steal the house for cheap. Respect the previous homeowner by sticking close to the cost they expect to get and ask your realtor if you think they are asking for too much. Don’t forget to have all inspections completed and filed before you accept any contracts from the seller.
Escrow and Closing Costs
Once all is said and done, you’ll only have to deal with closing. At closing, transfer taxes must be paid along with closing costs, legal fees, and adjustments. You yourself will not have to deal with much during this process except for providing the right documentation and information to your agent so that everything can be finished by the expected close of escrow date, when the ownership of the house will be transferred to you. (Your mortgage company will establish an escrow account to pay property tax and insurance during the term of the mortgage). Once the transaction is finished, the house is officially yours!
Finding the Right Real Estate Agent
It’s understandable if the steps above still seemed like a lot of information to take in. As a first time home buyer, you’re not expected to know everything, but it helps when you go into the process knowing as much as you can. Luckily, working with the perfect real estate team, such as Century 21 Northwest Realty, can help you take the right steps and find the perfect home that suits you personally and financially. Never underestimate the power of an experienced agent and how much they can help you get into your first home.