Buying your first home is a big deal. Not only is it going to be the biggest financial decision of your life so far, but it’s also kind of permanent—no refunds or exchanges--at least for a while. So, just like studying for a big test, you need to research and prepare for buying a home.
You’ll be getting advice from all directions on when to buy a house, where to live, how much money to save, and where to get a mortgage. Advice is great but remember: the housing market is always changing. The market is vastly different now than it was even a few years ago. Do your own research and learn as much as you can before jumping into buying your first home.
Your biggest concern is likely the cost of a new house. Homes come with huge price tags, and depending on your current financial situation, your monthly fees could be astronomical. It’s important to get your budget in order before you begin looking at homes. This way, you won’t give yourself the chance to fall in love with a home you can’t afford to buy.
Once you’ve got a plan for your monthly and upfront costs, you should look at your credit score. Your credit score is made up of five categories that give your financial health a score that banks, lenders, and even car dealerships use to measure the risk involved with loaning you money. The higher your credit score, the better deal you will get on your home loan.
Before you begin looking at homes, you should get a pre-approval. A pre-approval letter from a qualified lender like a bank, credit union, or private mortgage company will go far in helping you find your dream home. Getting more than one pre-approval isn’t a bad idea, but remember that when you are pre-approved for a loan, your credit score can take a hit. This is because pre-approval letters require a “hard pull” which counts towards your credit inquiries.
After you begin casually shopping for homes online and have gotten a pre-approval from a qualified lender, the next step is to find a real estate agent. Real estate agents are absolutely critical for finding your dream home. Not only are they experienced in finding the right house for their clients, but they are also privy to homes that may not appear in online searches. Plus, they’ve got your back throughout the process and will help you negotiate with sellers.
Swiping through homes online is a great place to start. Still, once you become serious about your home search, you should absolutely consider neighborhoods—your daily commute and access to transportation are major concerns. Plus, you need to find out whether you’ll even like living in a certain area and whether the costs of living there are doable.
Once you’ve chosen a neighborhood or two, it’s time to narrow down your list of favorite houses. For the most part, you can eliminate houses by flipping through photos online, but after you find a couple of contenders, take a tour! Tours can be done in person or online - many sellers are utilizing virtual video tours or Facebook Live tours.
Down payment assistance programs are state or city-backed loan assistance that help homebuyers purchase their homes by offering some or all of their down payment. These are especially helpful for first-time homebuyers!
Preparing to buy a home can be a difficult process, but you’ll be much happier in the end. First-time buyers are often overwhelmed with excitement, but as long as you’ve prepared and researched your options, you can’t go wrong!
One of the last steps before your loan is approved and the house keys are placed in your hands is underwriting. Underwriting is the process of risk ...
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