You’ve been working so hard trying to save for your first home, and now you are ready to start looking. Where do you start? What steps come first, and how can you be prepared?
Buying a home can be confusing. Therefore, it is best to partner with a reputable realtor so they can help you navigate through this unfamiliar process. They have the experience, knowledge of the local area, contacts with appropriate agencies, and skills with the entire process.
How To Buy Your First Home
There are several steps to purchasing your first home. Obviously, the first step is to have enough money for a down payment. The general rule is to have 20% of the price on hand for a down payment. But, of course, if you can put down more money, all that much better and there are programs that allow for as little as 5% or even zero down.
Select A Realtor
Selecting a realtor is one of the most critical steps in the home buying process. If you work during the day, you want a realtor available in the evening to show homes. When a realtor is not available the hours you are, the process can get really bogged down with lack of time.
Questions to ask:
- What hours is the realtor available to show homes?
- How much is the commission?
- How long have they been a realtor?
- Do they have experience with the type of home you are looking for, such as a multi-family, single-family, etc.?
Determine Your Price Range Through Loan Pre-Approval
Your realtor can help you determine a price range that works for your budget and work to get you pre-approval. This pre-approval process allows for a more accurate determination of price.
Find A Home
Finding a home can be exciting and frustrating. For example, one house may have too small a kitchen but a huge bathroom; another may have perfect bedrooms but no dining room. What if the house isn’t at all what you are looking for, but the property is amazing? You may be surprised to find that what you fall in love with isn’t at all what you originally had in mind.
Questions to ask while you are looking at homes are:
- How long has this home been on the market?
- How long has the current owner lived there?
- If a multi-family is the expectation that tenants remain?
- What other costs are there?
- Property taxes
- City water
- City sewer
- City trash removal or private pay
- Any additional taxes such as borough tax
- Type of energy—electric, gas, solar, oil
- If solar energy, is there an existing contract? When does it expire, and how can it transition?
- Are any of these expenses currently discounted, and you won’t receive the discount. For example, perhaps the current owners are elderly and receive a senior citizen discount, but you will not. Make sure you know the true amount.
- What are the local schools—and research these schools
- Are there any local attractions?
Now you have found a home with everything you were looking for. It is time to make an offer on your dream home. Be sure you know the market. For example, the market right now is a seller’s market. This means prices of homes will be higher than they have been in the recent past, and you could be competing with other potential buyers for the purchase. Ordinarily, you should be able to negotiate a price. 2021 may not be the time to negotiate but make sure you know the market.
Apply For A Loan
You’ve made the offer on your home, and it has been accepted. Now you need to apply for and receive a loan. Home loans are contingent upon three things — credit, ability to repay, and collateral. The banking institution needs to protect its assets. Loans for bad credit do exist, so it is important to know your credit rating before you start this process. You want to avoid surprises.
Your New Home
Congratulations! You have made it through the process and purchased your first home. Now the real fun begins with packing and moving. Enjoy!