As a former realtor, I worked with the first time home buyer many times. Buying your first home can be a nerve-wracking experience! That’s why I created this “First Time Home Buyer Checklist”.
1. Get a Mortgage Pre-Approval
A mortgage pre-approval is one of the first steps you should take when you’re considering buying a home. By getting pre-approved, you’ll know exactly how much house you can afford and can narrow down your search to homes that fit within your budget. Additionally, mortgage pre-approvals can sometimes give you an edge over other buyers who haven’t gone through the process. If you’re serious about buying a home, getting a mortgage pre-approval should be one of your top priorities.
2. Start Saving for a Down Payment
There are a few key things to keep in mind when saving money for a down payment on a home:
- Establish a budget and stick to it. This will help you determine how much money you can save each month.
- Automate your savings. Have a portion of your paycheck automatically deposited into a savings account earmarked for your down payment.
- Take advantage of windfalls. If you receive a bonus at work or come into some extra money, put it towards your down payment savings account.
- Make sacrifices. If you’re willing to live modestly for a while, you can accelerate your savings progress. Skip the vacations and nights out on the town and put that money towards your goal instead.
- Stay disciplined. It can be tempting to spend your hard-earned savings on something else, but if you want to buy a home, you need to be patient and stay focused on your goal.
Aim for 20% of the purchase price so you can avoid paying private mortgage insurance (PMI).
3. Get to Know Your Credit Score and Work to Improve It
There are a few ways that you can work on improving your credit score.
First, make sure that you are paying your bills on time and in full. This is one of the most important factors that goes into your credit score.
You should also try to keep your credit utilization low, which means using less than 30% of your available credit at any given time.
You can improve your credit score by checking your credit report regularly and addressing any errors or negative marks that may be harming your score.
Finally, you can consider adding a secured credit card to your repertoire to help improve your credit history.
4. Start Researching Neighborhoods
When looking for a neighborhood to buy your first house in, there are a few things you should take into consideration.
The most important thing is to find a neighborhood that is right for you and your family. You’ll want to consider things like the schools in the area, the crime rate, the distance to work and other amenities like grocery stores and parks.
Another thing to consider is the cost of living in the neighborhood. You’ll want to make sure that you can afford the monthly mortgage payments as well as the property taxes and any HOA fees. You can get a rough estimate of the cost of living by checking websites like Numbeo or Expatistan.
Finally, it’s important to visit the neighborhoods you’re considering and take a look around. Talk to people who live in the area and see what they think about it. You’ll want to make sure that you feel comfortable in the neighborhood and that it feels like home.
5. Find a Good Realtor
When looking for a good realtor, it is important to first know what you are looking for. Some things you may want to consider are the realtor’s experience, licensing, and specialties.
Once you have narrowed down your search, it is important to ask around for referrals. Friends or family who have recently bought or sold a home may have a good recommendation. You can also check review sites like Yelp or Google Reviews to get an idea of what other people thought of their experience.
Once you have a few names, it is important to do your research and interview the realtors. Ask them about their experience, what they think of the current market, and what their plan would be if you were to list your home or buy a new one. Be sure to get a sense of their personality as well; you will be working closely with this person for potentially months.
Finally, once you’ve made your decision, it is important to sign a contract with the realtor specifying the services they will provide and the fees they will charge. This document can help protect both you and the realtor in case of any disputes.
6. Making an Offer
Making an offer on a house can be a daunting task.
It is important to remember that you are not the only person making an offer on the house, and there is always the possibility that someone else could make a higher offer.
The first step is to find out as much information about the house as possible. This includes the asking price, how much the seller is asking for in closing costs, and any repairs that need to be made. You will also want to find out how long the property has been on the market and whether or not it has been inspected yet.
Once you have gathered all of this information, you will want to sit down and create a bid. Your bid should be based on the amount of money you are willing to spend, how much you think the repairs will cost, and how much you think the seller is asking for in closing costs.
It is important to remember that making an offer on a house is a negotiation. You may need to adjust your bid depending on what the seller says. If you are not sure what to do, it is always best to consult with a real estate agent.
Conclusion: While the real estate market has been very inflated the last couple of years, this allows you time to save and do your homework. Markets eventually correct and when the housing market does, you’ll be ready!