Are you a first time home buyer looking for some advice on how to get started? Check out this step-by-step guide to homebuying and find out what’s in store for you in the process. Buying a new home is fun and exciting but there are a lot of things to take care of along the way. Read up on each part of the process and prepare yourself for the most crazy and rewarding experience of your life! By sticking to these steps, you’ll avoid the most common costly mistakes of home buyers.
1. Define Your Goals.
Buying a home is a big step and it’s important to clearly determine why you’re buying and what kind of home you’re looking for. Are you moving out of the family home for the first time? Are you tired of renting and ready for a space to call your own? Are you looking for a bigger and better place for you and your family? Depending on your reason for buying, you’re going to have different goals in mind. Make a wish list of what you want in your new home so you have a reference for when you start looking. Your wish list might include things like a pool, ocean view, proximity to work, certain number of bathrooms and bedrooms, etc. Keep in mind however the financial realities of each bullet point on your list. Take the time to thoroughly examine your financial situation and project how much you can afford to spend.
2. Figure out your finances.
Before getting a mortgage or loan, you first have to look up your credit report and score. Go to Annualcreditreport.com to get a free copy of your credit report. Check for errors and get any problems smoothed out now. Don’t be afraid to dispute any problems, the better your credit, the better your interest rate and mortgage will be. You also want to research mortgage options so you can create an action plan and timelines for the future. You can just dive in yourself, but you may also benefit from consulting an experienced REALTOR® right from the start.
3. Contact a REALTOR®.
There are so many elements that go into homebuying which can become frustrating and confusing, you might forget how much fun it’s supposed to be. By working with a REALTOR®, you save yourself the headaches so you can focus on what’s really important – getting the home of your dreams. When choosing a REALTOR® you should consider track record, expertise and local market knowledge. Most importantly however, you want to find someone that you trust. Sit down with your REALTOR® and have a heart to heart. Share about yourself, your goals and your future dreams. If they are willing to listen and make it happen, you’ve got a good one!
4. Get Pre-Approved for a loan.
It’s recommended that you get pre-qualified for a loan before you even start viewing houses with the intention of buying. The pre-approval process involves finding a lender and authorizing them to examine your entire financial situation and history. Based on this information, the lender will provide documentation detailing how much you can borrow to buy a home. A good REALTOR®, like those at First Team, will be able to suggest lenders with a history of offering excellent mortgage products and services.
5. Find the one and fall in love.
Now for the fun part, looking at houses! Bring out the wish list you made earlier and take a closer look at it. Break your list up into “must-haves” and “like-to-haves” and maybe start with some online searches. Searching online can be a good place to start because you can take 5 minutes or 5 hours to browse, there’s no pressure. Keep in mind too, 81% of buyers say real estate agents are very helpful in the search process. Let your agent know what you’ve found online and take their suggestions – they’re the expert after all.
Also, don’t just consider the house when trying to find your home – look at the neighborhood, surrounding schools, shopping and amenities nearby and the overall community feel. Another piece of advice, don’t fall into love at first sight. House hunting is exciting and you may think you’ve found the right one the first time you’re out. Maybe you have, but then again maybe there’s something even better out there. The typical buyer searches for 10 weeks and views 10 homes.
6. Make an offer and negotiate.
Now that you’ve found the home you’d like to buy, it’s time to make an offer. Each local real estate association has their own contracts used for transactions in the area. These legal contracts allow you to specify and sale price and include lots of clauses to specify the terms of your home purchase, such as closing and possession dates, your deposit amount, etc. Look everything over with your REALTOR® and work together to write up your offer. Don’t worry, you’ve got the experience of your REALTOR® behind you, they’ll help you out and answer any questions you might have. Once you’re done writing up the offer, you give it to the seller. The seller can accept, reject or counter it and then negotiations begin. You will go back and forth until everyone comes to a mutually-satisfactory pending agreement. Factors to consider in negotiating are market conditions, homes and individual sellers.
7. Secure your financing.
Now that you have your pending agreement for the house, go back to the lender you’ve chosen and finalize your mortgage details based on the house you’ve chosen. This means getting everything set in stone including your down payment, interest rate, regular payment schedule and all other financial conditions tied to the closing.
8. Close the Deal.
You’re almost done which means it’s time for the closing process. First off there’s going to be a title search of the property you’re purchasing. This search ensures there are no claims against the title of the property. You will need to purchase Title Insurance to protect yourself against any errors or mistakes in the review process. Next the house will go through a home and pest inspection and once it passes each of those, you’ll do a final walk-though of the house. This is to make sure everything is in the same condition it was when you signed the sale agreement. Finally, you’ll go to a lawyer’s office and sign all of your paperwork to complete the transaction. The settlement includes paying your closing costs, legal fees, property adjustments and transfer taxes. This is when you receive the property title, keys to your new home and copies of all documentation.
9. Move in!
The day you get possession of your new home is usually a couple of days after you sign all of the final settlement papers. Call up a moving company or bribe your friends and family with pizza to help you because it’s time to make your new house your home! Unpack and enjoy your new space, you’re done with the homebuying process. Remember, the most important step when buying a house is choosing the right company who will be there for you every step of the way.
