Buying your first home can be a very exciting time, yet often a somewhat stressful experience. Your home will be one of the most important investments you'll ever make. Follow these quick tips to make your first time home-buyers experience a positive and successful one.
Pay Off Debt and Save For a Down Payment
It's important to pay off as much of your debt as possible before buying your first home. Your mortgage company will want you to have as low of a debt-to-income ratio as possible when buying your first home. You will also want to start saving for a down payment on the house.
Check and Repair Your Credit History
The interest rate you receive on your mortgage will be based in part on how much of a credit risk you are. Have you paid your bills on time? Use only a portion of your available credit? Take the time to check your report from the 3 major credit reporting agencies and do whatever possible to clear up any outstanding issues.
Consult With a Mortgage Lender and Get Pre-approved
Be sure to speak with a mortgage lender as soon as you begin thinking of buying your first home. Your lender will consult with you about your debt, income and money you have saved. They will give you advice on how much debt needs to be paid off, the price of a home you can afford and how much of a down payment you will need. They will also discuss the various loan options available to you. Your lender will prepare a good faith estimate for you which will include your down payment and anticipated closing costs. This will give you an understanding of how much your money you'll owe at closing as well as your ongoing monthly mortgage payments.
Find a Real Estate Agent and Start Looking For Homes
Do your diligence researching to find an experienced real estate agent to help with your search. Ask family and friends about past experience and agents they've used. Research online through agent matching sites such as UpNest or HomeLight. Focus on finding an agent that is experienced in working with first time home-buyers. Your real estate agent will work with your mortgage lender to find homes that are within your price range and the total monthly payment you are approved for. This will include property taxes and any required homeowner's association dues and insurances.
Write an Offer and Negotiate the Contract
Once you find the ideal home that meets your criteria, you will work with your real estate agent to write an offer. Your agent should do a comparative market analysis on the home or homes you like to be sure the home values are in line with the asking price. It's your agent's job to help you negotiate the best price for your home.
Hire a Home Inspector
After you have a fully executed contract on a home it's important to hire a company to perform a home inspection. The home inspector will look at the home from top to bottom to find any defects or safety hazards. If any are found, it's wise to ask the seller to repair, replace or give you a monetary credit for the defects or safety hazards.
Get an Appraisal on the Home and Get Full Approval
Your mortgage lender will order an appraisal on the home. The appraiser will do an analysis on the home and compare it to the home values of similar, nearby homes. This is important because you and your mortgage lender want to make sure the home is worth the price you are paying. A home appraised for less than the negotiated sale price will most likely cause issues with the lender, often requiring additional cash from you at closing.
Go to Closing
The last step is attending the closing on your home. You will have to read, absorb and sign documents for your mortgage, disclosures, settlement statement, deed and more. Once the papers are signed, the keys are yours. It's time to celebrate and move in!