Wanting to Buy Your First Home, but Don't Know Where to Start?
Congratulations! You are ready to start thinking about the initial steps to buying your first home. This process can come with so many emotions all at once and be both scary and exciting! That’s why we’re here to help. Here are five steps to consider when purchasing your first home:
Step 1 – Price
How much can you afford? Any home you buy is likely going to have the largest ticket price of anything you’ve ever bought. Deciding to buy your first home can be especially daunting because this new home is not going to be like buying a pack of gum at the checkout counter or even that new laptop you’ve been needing and researching for months. But ask yourself these three simple questions, and you’re already making great headway: Do I have a good credit score? Do I have a secure job with steady income? Have I saved up enough money for a down payment? First, a decent credit score might be something around 650-700, so check that to see if you are in a good range to get approved to buy a home. Second, one simple way to figure out how much you can afford based on how much money you make annually is by multiplying your salary by 3 or 4, and the sum will be your price range for buying a home. For example, if you make $50,000 a year, you should be looking at homes between $150,000 and $200,000. Third, a down payment can range anywhere from 0-3.5% of the purchase price. So, for example, if you were looking at homes around $175,000, the most you might need to have saved for a down payment would be a little over $6,000. Check on these few things, and you’ll quickly find what your price range might be. Look at you go!
Step 2 – Compare
Always look around for your best options. Compare everything from prices to properties to mortgage lenders. Contact a real estate agent to help you determine what prices you need to be looking at based on your specific situation. Every person lives differently, and we are here to cater to your needs and help you find a home for a good price that fits your lifestyle. Additionally, be sure to compare mortgage lenders because different lenders require different minimum credit scores and down payments. However, that’s not all there is to it, unfortunately. Some mortgage offers may show a lower down payment but require higher fees. Ask questions, and calculate the rates yourself—don’t get too excited when you see low numbers; do your research!
Step 3 – Get pre-approved
This process can be fairly quick, which is great because getting a pre-approval is a must before you start looking at homes so that you know where you stand and what you can even get approved to buy. Investopedia explains in one of their online articles the necessary things to have in order to get pre-approved: “Proof of assets and income, good credit, employment verification, and other types of documentation your lender may require.” This is a great way to get approved quicker so that you can start walking through your favorite homes on the market with a realtor.
Step 4 - What would you like to see in your home?
Maybe you prefer new construction, two-story homes with multiple bedrooms for all your children and a big backyard for your dogs. Or maybe you like classic one-story ranches with not so many stairs to climb up and down. Or maybe you really need a basement with a full apartment for your in-laws to live in. Whatever you’re looking for, it’s out there, and we can help you find it! See what kinds of neighborhoods are in your area that interest you, and look for houses in your price range. Start doing detailed searches on your criteria for a home, and get a real estate agent to help you search from their database of new houses on the market as well.
Step 5 – SOLD!
Yes! You’ve found the house you fell in love with, and it’s time to claim it as your own. This is when you can get your real estate agent to help you make an offer and sign a contract agreement with the seller. Once you and the seller agree on a price, you can get a home inspection and an appraisal to make sure that everything is fine with the house as far as walls, floors, leaks, air conditioning, and more, as well as to ensure that you are not paying more for your house than it is really worth. Then you can close on your house, sign the papers, and it’s yours! At closing, be sure to make sure you understand what every dollar is going toward, and do not be afraid to ask questions. After you sign the papers, you can get the keys, and this precious new house is all yours!