First Time Home Buyers. What you need to know before buying a house.
It is easy to become overwhelmed when you enter the home buying market. Friends, family, colleagues, and even acquaintances will give you their opinions if you are a first time home buyer. While most of them are looking out for your best interest, they are not fully aware of what is happening in the housing market.
Here are the critical steps you must take as you’re considering this major life step.
1. Take stock of your personal finances
You won’t be able to buy a home until you know what you can afford based on your personal finances. Be sure to keep track of your credit score and try to improve it as much as you can.
The better your score is, the easier it will be for you to get approved for a loan. You should also determine how much you have saved up for a down payment. Generally, homebuyers are expected to put up between 5 and 20 percent of the price of a property as a down payment.
2. Research the local market
Long before you actually put an offer on a home, you should be monitoring the condition of the market in the area where you will be buying. Pay special attention to the length of time that most homes in your price range stay on the market and if there are any big shifts in the asking price.
Partnering with any local realtor can help you understand these key data points.
3. Go through the pre-approval process
You might be able to guess what your house budget is based on your finances and credit score, but speaking with a lender will help you determine a specific number. In order to get pre-approved for a mortgage, you will have to provide your lender with some financial information, including your debts and assets.
4. List your priorities
Once you know how much house you can actually afford, you can actually begin your search for a home among listings in your area of choice. Although you probably won’t be able to find a listing that fulfills every item on your wishlist, like that indoor pool.
It’s a good idea to keep your priorities top of mind to ensure you know what to look for when buying a house. So write them down, and make sure to revisit them as you begin looking at homes. More on that later.
5. Find an agent
With your list of priorities and your pre-approval information in hand, speak to a real estate agent who can help you find a home. An agent can facilitate negotiations between buyers and sellers and show you properties that fit your budget and meet your needs.
6. Make an offer and negotiate
With the help of your real estate agent, you will determine a fair price to offer the owners of a home in which you are interested. Try to avoid making a low-ball offer. Often, owners who receive an offer that is obviously too low simply refuse it upfront and don’t engage in any further negotiations.
You should always defer to the opinion of your agent, as he or she will know a lot more about the housing market and the rules that apply to home offers.
7. Handle inspections and secure a loan
Home inspections are a necessary part of the homebuying process. Don’t skip this. It’s important to have the house you are purchasing professionally inspected to ensure you are aware of any damage or signs of structural wear.
An inspection will confirm whether the homeowners were honest in their listing and reveal any issues that might have gone unnoticed. After the inspection and the appraisal of the property, you can secure your loan with a bank or lender.
8. Submit paperwork and close
You will work with your lender and your real estate agent to ensure that all of the relevant paperwork for your purchase is in order. You will be able to move into your new home as soon as all of the paperwork has been completed and the seller of the house has been paid.