August 14, 2020
First Time Homebuyers, Here’s What You Need to Buy a Home!
Deciding to buy a home is one of the most significant milestones in the life of any family, couple or individual. Whether you’re buying a Mc Mansion or a cozy cabin, the items that you need to buy the home remains relatively the same. Narrowing down which house you’re going to buy can often take considerable time as well as some crunching of numbers, but the start of the homebuying process is always very exhilarating – especially for first timers!
Along with being one of the most exciting events of a person’s life, buying a first home can also be one of the most stressful and nerve wracking. To top it all off, very few of us were actually taught how to do it! Sure, we all know that buying a home involves finding a Real Estate Agent, touring houses, and getting a loan. However, many new homebuyers understandably find themselves unsure of where to start.
Fear not! Let’s dive in and take a look at some of the most important things that you’ll need in order to purchase a home.
1. Mortgage Pre-Approval
A Mortgage Pre-approval is an offer from a lender to loan you a certain amount of money under specific terms. That amount will help you to determine your budget to spend on a new home. When setting that budget, keep in mind that there are additional fees that come with purchasing a home outside of the actual home price.
The lender determines how much money they will allow you to borrow and at what interest rate through analyzing your income, credit history, employment information and various other details. In addition to helping you to get a good idea of your home budget, getting pre-approved for a mortgage also benefits the Buyer because it indicates to Sellers that you are serious about buying a home.
making the process of getting a mortgage smoother, getting pre-approved also benefits the Buyer because they will spend less time
2. Down Payment
Your down payment plays an important role when buying a home. A down payment is a percentage of your home’s purchase price that you pay up front when you close your home loan. Lenders like to look at the amount you put down as your initial investment into the home. A typical down payment is usually around 20%, but in order to get the loan approved in can range anywhere between 3%-20%. If possible, it is a good practice to put more down initially because the higher your down payment is, the less you’ll need to borrow and pay back with interest accrued.
Saving up the money to cover a 20% down payment is not easy and may take a considerable amount of time, but you’d much rather save now than have to pay more in the future. And to make matters worse, you’d be paying off all that compounded interest on top of the principle amount that you originally borrowed!
3. Real Estate Agent
There are numerous benefits of working with a Real Estate Agent, especially as a first-time home buyer! For starters, they can help you to save considerable time and money during the home search process through providing you guidance on who to contact when looking for a Mortgage lender. After you’ve been pre-approved, your agent will connect with you to get an understanding of what you are looking for in a home. This includes the neighborhood/ area you’d like to live in, how much space you need, what added amenities you’re looking for, in addition to several other pieces of information.
Your Agent will then go on the hunt for your perfect home! Some tools agents use include a program called the Multiple Listing Service (MLS), as well as online search tools. From there, they can set up tours for you to visit the homes in-person. Once you’ve decided that you want to put in an offer on a home, your Agent will put the documents together on your behalf to present them to the Seller’s Agent. They also will be able to consult with you on what a reasonable offer would be so that you aren’t overpaying for the home. If your offer is accepted, your Real Estate agent will also be able to walk you through the closing process.
4. Home Inspector
After your offer has been accepted on a home, the next step is to schedule a home inspection to do a thorough review of the home to ensure there are no major issues with the property you intend to purchase. An average home inspection will focus less on the structural aspects of the home and more on the visual condition. Some of the items they will address include the attic, roof, HVAC system, plumbing, electrical, walls, etc.
In addition to the official inspection, it is a good idea to inspect the home yourself alongside your Real Estate Agent to ensure that the inspectors captured everything in the house. While it’s completely normal for homes to need repairs, be on the lookout for water damage, pet damage, foundation problems, as well as signs of mold or mildew. While they may seem like small issues, these can become much more serious with time and have the ability to dramatically decrease a home’s value.