So you’ve decided to buy your first home…
This is a big deal and for many people, it’s the biggest purchase of their life.
So before we start I just want to say,
Here’s a helpful list of the homework that you need to do first:
Get and review your credit reports
Don’t even start looking for a home until you’ve seen your reports from credit companies such as Experian, Equifax and Trans Union.
This is step one and it must be completed before you go any further.
Manage Your Finances
While you are in the process of tweaking your credit report for a lender to view take some time and decide how much you can afford to spend each month.
Think about how much your rent is now and how much more you could spend each month and still be comfortable.
You may find that you can qualify for a loan for as much as $350,000 but that doesn’t mean that payments on such a loan would fit into your budget.
Be very careful not to get yourself into a situation where you buy a house and then have no money to have a life because of the monthly payment.
Once you feel that your credit is in decent shape you need to make an appointment with a lender and have them preapprove you for a mortgage.
Note: Preapproval and prequalified are two different things.
Preapproval means that you have met all of the lender’s requirements and that you have a loan to use to buy a home.
Prequalified tells you how large of a loan you could get if you meet all of the lender’s qualifications.
Remember the difference.
Choosing a Real Estate Broker
It’s time to find a professional real estate broker to help you find a house and to help you through the process of actually making an offer and purchasing a home.
because a buyer's agent looks out for your best interests rather than the seller's.
You will probably feel much more at ease and comfortable with this kind of agent working with you.
On the other hand,
A seller’s agent works for the seller and will try to get the best possible deal for the seller and if you are not comfortable with purchasing a home that can be intimidating.
When looking at properties with your agent look with your eyes before you let your heart see the house.
This is very important, especially for unseasoned first time home buyers.
It is so easy to fall in love with the charming aesthetic qualities of a home and in the process overlook potentially costly flaws or pay more than the house is worth which brings me to my next point regarding home inspections.
Inspection, Skip at Your Own Peril
When you do find a house and you are ready to make an offer don’t skip the home inspection!
A good home inspector will normally charge between $300 and $400 to look over a property before you make an offer.
This is money well spent.
An inspection will find costly problems that you will want to avoid buying like foundation problems, electrical or plumbing problems, etc.
Keep in mind that no house is perfect and that if your inspector finds some repairs that needs to be done, you can usually negotiate the price of the repairs into the final purchase price.
Hiring an Attorney
Always have an attorney review the offer, purchase, and sale agreement.
These are legal documents and you need to understand them and make sure that they contain all of the protections you need before you sign them.
Attorneys fees will vary so make some calls first.
Insurance for Your Home
Make sure your home is enforced by law so you need to check that you can insure your home.
If the home had past claims filed for water damage you may find that it’s difficult to find a company that will cover the house.
If you do find a company that will sell you a policy you may find that you can’t afford the monthly payment.
Be sure and do your homework before committing.
Be very careful before you settle on a mortgage.
Mortgages are a high-pressure sale so don’t fall for a slick sales pitch without first weighing your options and seeing what else is out there.
Educate yourself with the many different options that are available for financing.
Understand all of the terms first and take your time so that you select the deal that is best for you.
Good luck and happy house hunting!