First-Time Home Buyers Guide
Are you ready to settle down and finally own the roof over your head?
Of course you are! Buying a home gives you a sense of freedom and stability unlike anything else. It allows you to finally stop throwing away money on rent and live in a place that's fully yours.
The home buying process may seem daunting at first, but it's also an incredibly exciting time. We've come up with a list to help outline the key steps and give you useful tips to guide you along the way.
Check your Credit Report & Score
This seems obvious, but as soon as you start thinking about home ownership, it's very important to have your personal finances in order. Good credit, a clean history of paying bills, and a maximum debt-to-income ratio of 43% is crucial when it comes to locking down a mortgage.
Determine What You Can Afford
When deciding how much you can afford, your monthly mortgage payment is an important thing to keep in mind. But it's only one of the factors in understanding the total cost of your home. Other costs include the down payment, property taxes, homeowners insurance, home owners' association fees (for condos/townhomes), closing costs, and upgrades and maintenance fees.
Get Pre-Approved for A Mortgage
Before you begin shopping, it's important to get pre-approved for a mortgage so you have a good idea of the price range you can afford. You may have your eyes set on a property in the $250,000 range, but lenders may approve you for only $150,000 depending on factors like how much other debt you have, your monthly income, and how long you've been at your current job.
Decide on Type of Home and Location
With so many options out there, it can be tough to narrow down which type of home is right for you. Are you on the lookout for a large single-family home to fit your growing family, or is a condo or townhouse a better fit for your lifestyle? Do you want to live in a bustling city, or do you prefer quieter suburban areas? How far are you willing to commute to work? Are school system rankings important to you? These are all necessary questions to ask yourself to help focus your search.
Once you know the type of home you want, it's time to narrow down which features you need. Start with the biggies - number of bedrooms and bathrooms, landscape layout, and style of home. Be warned that you may want to retain some flexibility in your desired list, especially on some of the smaller details.
Let The Search Begin!
As you continue to align your finances and your plans for home ownership, having a professional to guide you through the process (and avoid any pitfalls) can be very helpful. A real estate agent can help you, not just in locating homes that meet your desires and price range, but they can also advise you in negotiating the purchase process, help you make the right offer, and guide you with the loan, closing, and escrow process.
Search for A Home
Nowadays, there's no shortage of sources to look for available homes, including online sources, real estate agent recommendations, lawn signs, and word-of-mouth through friends, family, and co-workers. Services and apps like ZipRealty let you save your preferences and sign up to get alerts when homes that match your preferences come on the market. Before you know it, you'll be spending your evenings and free time browsing through images, updating your Pinterest boards, and saving tons of dream home options.
Attend Open Houses
Once you narrow down your options, it's time to get out there! Attending open houses is the best way to get a true feel for the home in all its staging glory. It is recommended that you go to these open houses with your agent, so that your agent can deal with the seller's agent directly.
Lock It Down
Make an Offer
After months of reviewing online listings and many weekends spent touring open houses, you're now ready to make an offer. Work with your agent to decide how much money you want to offer for the house, along with any conditions you want to ask the seller about. Your agent will present the offer to the seller's agent, and it will either get accepted, or will result in a counter-offer. This process can go back-and-forth until someone accepts the offer.
This is a good time to review your budget (again) – consider closing costs, any immediate maintenance and repairs, and other mandatory needs before you can potentially move in.
The time has come to sit down and determine which mortgage option is best for you. There are plenty of mortgages out there that can match your personal financial philosophy, timeline, and goals. Talking to a professional financial advisor is a great way to narrow down your options. Be sure to ask your ZipRealty agent for a financial advisor recommendation.
Get A Home Inspection
A thorough and professional home inspection is a recommended next step to be confident that the house is free of unexpected repairs. The results of the home inspection will equip you with the necessary information to decide to keep your offer, or rescind your offer and get your deposit back. It can also help you negotiate with the seller to make any necessary repairs or discount the selling price.
Get Homeowners Insurance
Before you sign the dotted line, it's crucial to settle on the right homeowners' insurance plan. Contact several insurance companies to get a feel for what's out there (your financial advisor can help you out with this as well).
Close the Sale
Closing is the last step, after any final negotiations with seller - and will involve a good amount of paperwork to complete. Closing includes processes such as home appraisal, title search, mortgage insurance, and mortgage paperwork. Be prepared with the upfront amount to take care of the closing fees, which can include costs such as: loan-origination fees, title insurance, surveys, taxes, and credit-report charges.
Congratulations! You've purchased your dream home. Now the real fun begins - the move-in process. Time to start hauling those boxes!