Buying your first home can be very exciting thing, but at the same time it can be very scary. On one hand, getting your first home is a very big step toward financial freedom. It is a symbol of independence, of you owning your little piece of land in this world. I know that’s how it felt for me. Nothing beat that feeling of officially moving out of that small apartment with too many rules, or, even worse, your parent’s house. On the scary side, a lot of things can go wrong when buying your first home. You don’t want to pay too much, or worry about buying a home that turns out to be a lemon, filled with problems. This guide for 1st time home buyers was created to show you the real process that happens from the time you decide to buy a home until the time you close, so you can be prepared for the road to come.
To help ease the worry, I wanted to write this guide to help guide you along the path to buying your first home. As a realtor, I work with a lot of first time homebuyers helping to guide them through the complex process of making it to home ownership.
1) Determine What You Want
Before you even start looking at homes, your very first step should be to think about exactly what you want to want in a home. Decide of the features that are most important to you. How many bedrooms do you want? Have you been tired of sharing your bathroom your entire life, and dream of having a second bathroom? Is a finished basement a must for you? Do you want only one floor ranch home, or are you looking for a second floor? Last but not least, what location are you looking for? Now keep in mind that all of this depends on how much you can afford, which brings me to the second step, getting the money.
2) Get A Mortgage Pre-Approval
Your second step should be to talk with a mortgage lender. This is quite possibly the most important step when it comes to buying a home. Without a pre-approval letter or some sort of proof that you have the funds to purchase the home, you cannot make an offer on the home. A lot of first time home buyers tend to delay this step for whatever reason. Sometimes you tell yourself you are too busy (even though it can be done online or over the phone now). You tell yourself you are waiting for your credit to get better. (3 Ways to Fix Your Credit Score). I know this can be a scary step, but the truth is that until you do this, you will not be able to get your dream house. Also, since this is a seller’s market due to the low inventory of homes, good homes tend to sell fast, within a matter of days. Without that pre-approval letter, you could find your dream home and see it snatched away by someone else because your pre-approval was not ready.
Without talking to a mortgage lender or a bank to get pre-approved for a mortgage, then you really don’t know your budget is. You don’t know what you can, or cannot, afford. There is no worse feeling than to look window shop for 300k homes for months only to find out that you can only afford 250,000. And just in case you were thinking about it, you cannot negotiate with the seller of a 300k home and convince them to drop it to 250k. As a realtor, let me just say that the odds of that are slim to none.
Also, you need to loan what type of loan you can qualify for, because that can determine what type of property you can have. If you are looking for a low down payment, then FHA can be a good option for homebuyers. However, with FHA loans, the home needs to be what they call “move in ready”. In other words, you cannot buy that cheap fixer upper home you’ve been eyeing if it doesn’t meet the FHA requirements. (List of FHA Requirements). If you are looking for a fixer upper, you may want to consider a conventional loan, or an FHA 203k loan. Here is an article that will further explain the (different loan options and what they entail).
3) Find a Realtor to Work With
Yes, I know I am biased on this step, but once you have been pre-approved, it’s time to find a realtor who can show you the properties you like. Do not worry about the cost, as this service is absolutely free for buyers, so you might as well take advantage of it. Your realtor can work on scheduling the showings for all the properties you want to see (which is a lot more difficult than you might think), and walk you through what to do once you find a home. They can also look up what comparable homes have sold for, so you do not spend too much money (please do not rely on zestimates, they are not accurate).
4) Start Viewing Homes!
Now, we can finally get to the fun part: looking at the homes you chose! When looking at homes, there are a few things you should keep in mind. The first thing is to remember the criteria you were looking for (step 1). This will help you to remain focused, and not get caught up in things that don’t really matter to you (such as a home with a huge 3 car garage when you only have 1 car).
The second thing is to remember that it is a seller’s market. Basically, there aren’t as many good homes out there in the beginning of 2018 than in the past. Once a good home comes on the market at a good price, it will be gone fast, and may have offers from multiple buyers. That’s why it is so important to have your pre-approval ready, so you can be ready to make a move on that home you fall in love with (step 2).
The third thing I want to consider is to make sure you follow your gut. Soon you will find that home that will give you that “wow” factor. You will see a home that fits most, if not all, of your criteria, and you start to imagine yourself living in that home. If the home does not give you that feeling, do not go for the home, its not worth it to you. Buying a home is a big decision, so if you want to purchase a home, make sure that your heart is in it. The reason I say this is because the process of buying a home can be a long, bumpy road. It is rarely a smooth experience, and you can pretty much count on something not going according to plan. If your heart is not in it, you may end up with wet feet and think about backing out of deal, which will only lead to more frustration. As much as us real estate professionals try the process easy and seamless, there will be problems along the way, so make sure that the home is worth it.
Once you find the home you fall in love with, stay tuned to part 2 of the first-time homebuyer guide to find out the next steps of the process!
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