Buying that first house can be so exciting, exhilarating and fun! It can also be daunting, time-consuming and most importantly overwhelming if you don’t know where to begin. Here is a couple of tips to get you ahead of the curve and get you into your dream home that will hopefully be the forever home you always imagined yourself in.
Let’s start with the basics. First and foremost, it is important to determine how you intend to pay for your new home. Will you be financing or paying with cash? If you are like most people you will probably be using a portion of financed money. It’s a great idea to set realistic goals of how much you can afford monthly. Also, factor in life changes and unforeseen situations that might hiccup along life’s way. Remember, just because you can afford it now doesn’t mean that you will be able to afford it down the line. It is always best to have the lowest monthly payment or the shortest term if you are able to afford a higher payment. Once you determine what that might look like for you, go ahead and find an institution you are interested in and get a pre-approval letter to have handy for your real estate agent. This letter is so important because it gives you an idea of how much you are able to borrow and what figures you are working with. It also gives you a ballpark at what areas you are able to start researching and looking for houses in. Not all neighborhoods are created equal so make sure to do some investigative work.
Now that you have your pre-approval letter and your budget set along with your down payment costs, you are able to start looking for a house you are interested in and in what areas you are able to do that. As they say, location, location, location! This is key. Make sure to visit certain neighborhoods on different days and during different hours. This will give you an idea of how active the neighborhood is and the noise level. Also, make sure to determine if there are certain amenities nearby that are important to you. Perhaps you want a hospital nearby. Map out other amenities like grocery stores, gas stations or Starbucks. Things that might be very important for you to have within a short driving distance. Checking out statistics, in regard to crime, is also not a bad idea. Better safe than sorry.
Now that you have found your home and you want to go ahead and make an offer. Make sure that you have all of your ducks in order. Did you factor in all of the closing costs? Depending on how motivated a seller is to close, sometimes the seller’s cover a portion of the buyer’s closing costs. At other times, the sellers cover the entire amount if they are willing. It does not hurt to request in your offer for a closing cost credit to be covered by the sellers at closing. This is something to consider in case you want to save money toward any kind of repairs or furnishing your new home. Basically, extra cash in your pocket is always a nice bonus.
The offer is in, the sellers accepted and it is time to get the ball rolling with your mortgage company. This is sometimes where things can go south if you are not prepared and didn’t do your homework. Make sure to have all of your T’s crossed and all of your I’s dotted. Have everything prepared and make sure not to open any new lines of credit so that they don’t negatively impact your creditworthiness or decrease your credit score. It’s best not to go out and buy a brand-new car during the process. Some items you can expect to give to your loan officer are your income documentation, tax returns, W2’s, letters of explanation, bank statements, driver’s license, gift letters, renting history and signed and dated disclosures. Once you are at the closing table, you can expect to sign a lot of paperwork. Once that is wrapped up, congratulations! You should be holding the keys to your first home.