If you’re a first-time homebuyer, congratulations! You’re about to embark on a journey that will shape the rest of your life. Buying a house is a huge milestone, so of course, you want to make sure you do it right.
We know that buying a home can be an intimidating and overwhelming process. That’s why we’ve assembled the ultimate guide for first-time homebuyers.
1. Take Stock
Buying a house is a massive expense. If you’re going to commit to purchasing a home, it’s better to start saving early. Once you’ve banked a considerable sum, you should be thinking about the shape of your finances. A good rule of thumb is that you should be debt-free and have an emergency fund of around three-to-six months’ worth of expenses saved up.
In the beginning stages of the home buying process, you should be thinking ahead. What are your plans for the future? Do you have a ten-year plan? A 20-year plan? Consider what your life might look like down the road. You want to buy a house that will fit that vision.
2. Create Your Budget
Once you’re in decent financial shape, it’s time to figure out how much you’re prepared to spend on your home. Your monthly housing costs should ideally total no more than 25% of your net monthly earnings. Housing costs include homeowner’s association fees, insurance, taxes, utilities, and maintenance.
Most home mortgages take between 20 and 30 years to pay off. When setting your budget, think about whether you’ll be able to make that payment every month for 20-plus years. Be realistic.
3. Loan Preapproval
Before you take out a home loan, it’s a good idea to shop around for the best rate. Apply for a home mortgage with a handful of lenders to compare their terms and rates of interest. Ideally, you want to pay the lowest interest rates possible, but there are plenty of factors to consider when choosing the payment option that works best for you. It’s essential that you thoroughly investigate all your options before you pick one.
Your credit score and financial history will also have an impact on who will loan to you. Seek professional advice, as this is a decision that will affect you for many years to come. Once you have a loan preapproved, you’ll be empowered to make an offer on a house in your price range.
4. Real Estate Agent
While it is possible to buy a home without the assistance of a real estate agent, first-time homebuyers may feel more comfortable working with an agent. They can provide you with invaluable insights into the housing market, and find options that fit your specifications. You want to hire a real estate agent that has your best interests in mind and who understands exactly what you’re looking for. It’s crucial to establish a good relationship and line of communication right off the bat. Your agent will be your teammate during your home search.
5. Finding the Right Home
Now that you have your support systems in place, you can start looking for the perfect home. This is the exciting part – but it can also be overwhelming. Knowing what you want will help narrow down the options. What are you looking for in terms of amenities? What do you value most in a property? If you plan to have children or have them already, what kind of school district and neighborhood do you want to live in? These are all questions you can use to guide your search for the right home.
Once you’ve established some expectations with your real estate agent, they will bring you to see houses that fit your needs and budget. A good agent won’t waste your time looking at places that won’t work for you.
6. Make an Offer
Once you find the perfect place, it’s time to make an offer. This part can be a little intense, as you probably won’t be the only one making an offer on the home. Your real estate agent can find comparable listings in your area to help you make the most competitively-priced bid.
The offer typically includes the price, any requested contingencies on the sale, and the deadline by which the seller should respond. The seller can then accept, decline, or make a counter-offer on your bid.
7. Home Inspection
If your offer gets approved, you’re just a few steps away from owning a home! Part of closing on a property is getting the place inspected. A positive home inspection could even be one of the contingencies you include in your offer. This involves hiring a licensed and experienced home inspector who will do a thorough examination of the property, and it’s your responsibility as the buyer. The inspector will be able to tell you about any issues the home has or any repairs it may require. You can then negotiate with the seller about who will cover the costs for repairs and renovations.
8. Closing the Sale and Final Details
It’s time to tie up loose ends. You will need to get homeowner’s insurance; your mortgage lender often requires it, and it will protect your investment. Again, you should shop around to find the best deal and terms for you.
When buying a home, expect the unexpected. There are lots of upfront expenditures, but you should be prepared for hidden costs as well. Despite the best-laid plans, there may be some sort of a wrench in the works, but it shouldn’t be a problem if you think ahead.
Before the sale is closed, you’ll do the final walkthrough to ensure that everything looks the way it should. Then, you’ll sign a lot of paperwork, finalize your loan, and transfer the ownership of the house. But don’t worry, your agent will help guide you with the closing process.
Congratulations, the house is now yours! You can finally breathe a sigh of relief and settle into your new home.
If you are a first-time homebuyer, you must explore all your options. REX can save you up to 50 percent on agent commissions through our Buyer Rebate Program. Reach out today to learn more!
Give us a call at 855-205-0599