If you've decided you're ready to buy your first home: first of all, congratulations! Second, get ready for a lot of work (both before and after you buy), but we promise, it'll pay off.
Being a homeowner is a huge responsibility but is worth it at the end of the day. But before you can start designing and decorating your own space, you need to go through the home buying process!
What is the process of buying a home you ask?
Looking at different houses, finding one you love, putting in an offer and moving in, right?
Well, kind of…
There are a lot of important steps that need to be taken before you can just “buy a house”. Being well prepared for what to expect will not only give you a leg up on other buyers, but it will help your buying process go smoother.
Below are 9 tips to keep in mind when you begin the home buying process.
Once you've decided you're ready to buy, you should start saving immediately, especially if you haven’t already! There are many costs that go into buying a home and you want to be prepared for those when they come up.
A few costs you’ll want to keep in mind are: down payment, closing costs, inspections, and appraisal fees. You'll also want to factor in any renovations, appliances, etc that may be needed after closing.
Your credit score is going to be an important factor in the mortgage process. It will play a direct role in how much a mortgage company will lend, along with the interest rate they will offer you.
You also want to make sure you aren’t making big changes to your credit score. This means not charging any big purchases, opening/closing accounts, or credit cards. All of these will affect your credit score.
A Mortgage lender is a key player in your home buying process. Make sure you're working with someone you feel comfortable asking questions!
Your mortgage lender is going to help you determine how much you can afford, the interest rate you are eligible for and when you finally get your dream house under contract, the amount of “cash to close” you are going to need.
When talking to your lender, they'll tell you the amount they will lend you for your home purchase. With that information you need to determine what your top dollar is. What is the amount you are comfortable spending on your home? Look at what your rough monthly payment would be and make sure you are comfortable with that payment!
A pre-approval letter is essentially a letter from your lender stating that they are willing to lend a certain amount of $ to you. This is going to be important when you are putting in offers. Having a pre-approval letter shows the sellers and agents that you are a serious buyer. You can also get a pre-qualification letter, which is a slightly less serious letter that essentially says a bank is likely to lend you a specific amount of money.
A real estate agent is another key player in your home buying process. A good agent is going to help you navigate the current market, negotiations with sellers, ease the closing process, and help with any questions that arise during the process.
Communication with your agent is very important. You want to make sure you are working with an agent you trust and feel comfortable with.
Do you want a single-family home with a lot of land? Do you want a townhome, a condo? There are pros and cons to each type of home, and you will have to determine which is the best option for you.
What are you comfortable with for a commute to work? Do you want to live in a city, close to amenities or do you want to live in the suburbs or the countryside? Again, everything has pros and cons. What is going to best suit your lifestyle?
Remember when you figured out what you were comfortable spending? Stick to that! Don’t look at houses that are beyond what you said you were comfortable spending; this is only going to lead to heartbreak if you fall in love and can’t afford the monthly payment.
And most importantly...
Buying your first home, or any home for that matter, is a big commitment. You should feel 100% comfortable with the decisions you are making. Lean on your realtor and lender! They are there to help the process go as smooth as it can and hopefully keep your stress levels low.
If you have a question don’t be afraid to ask. Being well informed about every aspect of the process is only going to help you feel confident and secure in your decisions and purchase!