There aren’t many experiences as exciting as buying your first home. In fact, you may already be daydreaming about the ideal house, its features, neighborhood, and all the memories you’ll make. However, before you jump in and start shopping, here are a few tips to keep in mind.
Check Your Credit
Your credit report needs to be in tip-top shape. Lenders will review your credit report to view your credit history to see how you’ve handled payments in the past. They also want to see your debt-to-income ratio. Lenders want to know you’re not in over your head and can afford your mortgage payments. It’s imperative that you avoid making any significant purchases before and during the home buying process.
You should also seek pre-approval for your home mortgage loan before you begin the house-hunt. Pre-approval positions you as a qualified buyer, could give you the upper-hand when placing an offer, and determines your actual budget for purchasing real estate.
Grow Your Savings
You’re going to need more than a home mortgage loan for the financial investment of buying property. Also, you’ll need a 20 percent down payment. In addition to the down payment, you’ll put down an earnest money deposit with the offer you make on the house. Furthermore, there are closing costs for which the buyer accepts responsibility. Closing costs include an appraisal, inspection, survey, title check and transfer, escrow agents, legal fees, courier fees, agent commissions, and any other expenses incurred during the transaction. Closing costs do not get paid through your home mortgage loan, so they’re extra money you’ll pay out-of-pocket.
And the money train doesn’t stop there. You’ll be taking over property taxes, homeowners insurance, and potentially Homeowners’ association fees, pending location of the property you buy. You also have to budget for moving expenses, utility activation, and other costs associated with your move.
Find a Real Estate Agent
With your finances in order, you’ll begin working with your real estate agent to explore housing opportunities. Do not be in a hurry. Your agent will help you understand what your money will buy in a house, so you may have to forfeit some of the items on your wish list, or the location in which you’re hoping to live.
Rely on your real estate agent to help you understand what does or doesn’t come with the property you’re buying. You may not inherit the window coverings, appliances, or other items considered the personal property of the seller. However, you can request that the seller includes some of the things you admire, which is open for negotiation before the writing of the contract.
Do not fall in love and become emotionally attached to houses. Many things can happen along the way that disqualifies the purchase. The house may receive multiple offers wherein the seller chooses another buyer. Inspections and appraisals could reveal problems that make the risk more than the reward.
Be patient with the process. Buying real estate takes time. The waiting period may be the most difficult part of the transaction once you’ve put in your offer. Your daydreams tend to take over. Although your pre-approval for your home mortgage loan may expedite the process, certain steps must be taken, such as title check, appraisal, inspection, and survey.
Appraisals, Inspections, & More
The title check verifies that the house is free and clear of tax holds or liens preventing the seller from being able to sell the property legally. The survey clearly details property lines. The appraisal satisfies the bank that the home is worth what you’re borrowing. The inspection checks for defective items in the structure such as electrical, plumbing, heating and air, roofing, and also checks for pests such as termites. During these processes, you’re still able to negotiate terms, but upon completion of these steps, the contract is locked in.
Your experienced real estate professional will guide you through each of the processes in buying your first home, but it helps if you have a heads up or a sneak peek into the home buying experience. Take the time to educate yourself so you know what to expect along the way.
When you have an accurate idea of what to expect, you can thoroughly enjoy the exciting experience of shopping for and buying your first home.
Your real estate agent is the best source of information about the local community and real estate topics. Give Heather Fitzgerald (317-371-2622 ) a call today to learn more about local areas, discuss selling a house, or tour available homes for sale.