For whatever reason you’re wanting to take the leap of home ownership understand that it can be both an exciting as well as challenging. For most people purchasing a new home will probably be the most expensive thing they’ll ever buy so preparing yourself for the home buying process is highly recommended to save yourself a bunch of money and headaches.
The best way to get prepared for buying your new house is to do your research which you can do by reading up on your own with the massive amount of resources like online websites, books, etc. You can also consult with real estate professionals in your target area.
1. Attend a First Time Home Buyer’s Seminar
When you’re trying to buy a house it is just like everything else in life and that is you need to learn as much about the subject as possible. Making the wrong decision on your first house can come back to haunt you, so why not take a little time to learn the ropes and better prepare yourself for success. Learning from real estate professionals with a wealth of knowledge is a great way to learn this information.
First-time home buyer seminars are offered by a range of organizations, including city housing departments and non-profit organizations. The information you can learn can range from tips on shopping for a home, financing the purchase, and maintenance tips that will help you after buying the home.
2. Know Your Limit
Don’t set yourself up for disappointment by looking at houses you know you can’t afford. I know seeing that big house with the ocean view could anybody’s dream but if you can’t afford it you are only going to set yourself up for failure in the future.
Before you even begin your house hunting venture you should take a hard look at your current expenses and see what you’re spending your money on like how much you spend in gas each month, how much money goes toward groceries and other necessities, and the list goes on and on, these are the things you need to consider because it can greatly affect your way of living.
Once you’ve figured out what you have left after you pay all of those bills is what you will have left to pay on your mortgage and home expenses. Don’t forget to factor in all new home related expenses such as insurance, taxes, possibly increased utility bills, and even the occasional visit from service professionals.
If those numbers just aren’t adding up for you then use this as a starting point to make changes to your spending habits. Think about those things that you could probably go without. Things like getting that costly cup of coffee every morning from your favorite coffee shop.
3. Prioritize What You Need and What You Want
Let’s face it when you need to stay strict to a budget you will need to make compromises. Knowing exactly what you really need compared to what you want will help you make easier buying decisions when it comes to making an offer and narrow down your options for buying a home that’s just right for you.
Start off by creating a checklist and break it down by the things you need in a house and then you thing you would want in a house. Don’t forget to include things that aren’t actually a part of the house, but important, such as the neighborhood, commute, school system and even proximity to amenities.
When you start your house hunting quest make sure you take your prioritized list along with your and write down notes about each house. After you’ve looked at several different houses these notes can help you remember what you liked and did not like.
4. Which Mortgage is Right for You
You are probably like most people and are not going to outright pay for your house with cash at closing so you’re probably going to need to get some kind of loan or mortgage. A mortgage is a type of home loan that uses the home itself as collateral, which gives the bank legal actions to take the home if a person with the loan defaults on payments.
When taking out a mortgage think about the long term goal. If you are one of those people who never plan to buy another home again then a 30 year fixed rate mortgage might be your best option. However, another couple might look at this home as a starter property that they only want to own until their second child is born. They might want an adjustable rate mortgage.
You can also benefit by shopping around for your mortgage to find the best rates. Different banks will offer different interest rates and terms for the loan. Make sure during your hunt for a good mortgage you compare apples to apples, which mean comparing the same types of loans, terms, and amounts to get a better understanding of what the best deal really will be.
5. Search For First Time Home Buyer Programs
If you are a first time home buyer it’s a good idea to look into programs that will assist first time home buyers purchase a new home. There are government organizations that offer programs to first time home buyers who meet certain criteria lower rate loans, down payment options, and more. Banks and other financial institutions may also offer first time home buyers assistance.
A FHA (Federal Housing Administration) loan in one such loan assistance program that is popular amongst first time home buyers. With a FHA loan a smaller down payment is more accessible for those with a lower credit score or income.
6. Get Pre-Approved for a Loan
The first thing you should do before you even begin the house hunting process is get pre-approved for a mortgage so that you know exactly how much house you can afford. This will ensure you that you don’t waste your time searching for houses a lender won’t qualify you for.
You may think you can afford a $300,000 home, but lenders may think you’re only good for $200,000 depending on factors like how much other debt you have, your monthly income and how long you’ve been at your current job.
7. Find the Right Real Estate Agent
You can look at a real estate agent as your insider to the world of home buying so finding the right real estate could be the difference between things going smoothly or having a horrific experience during your home buying process. You want someone you can trust and who will give you quality advice when you need it.
When you are shopping around for a real estate agent you might want to start out by asking family, friends, and colleagues of any recommendations of a good agent they may have used. If you are moving to an area that’s far from your current location then you won’t be able to ask around as easy.
One thing you can do to weed out bad agents is to ask for references from their last six months of clients and then call those references and ask questions about the potential agent. If an agent doesn’t want to give references then you know you don’t want to go with that one and move on to the next.
Many real estate agents specialize in certain areas of town or types of property, so ask your prospective agents how many homes they’ve sold in your target area or what type of certifications they hold to see if they fit your needs. You may want to look into hiring a Realtor, which just means that your real estate agent is a member of the National Association of Realtors and has pledged to abide by a code of ethics set out by the group.
8. Understand the Offer Process
Once you have found the right house for you it’s now time to start the process of making it your own. The first step in this process to get the ball rolling is making an offer. While there’s no way to know exactly what offer a seller is willing to accept, there are several things to take into account when making your offer.
Factors like; knowing how much the asking price is compared to other houses in the same area or how long a property has been listed on the market can be a huge difference when negotiating price. Realize that negotiation is usually inevitable, so be sure to leave a little leeway within that first offer.
Be sure to include contingencies in your offer on things like the results of the property inspection or getting approved for financing. You don’t want to get stuck with a property that needs lots of work and could end up costing you more than you bargained for. So always have an escape clause in place just in case you need to go back to the negotiation table.
9. Get a Home Inspection
Not only is getting a home inspection a smart thing to do to protect yourself but most lenders will require you to have a home inspection completed before they lend you any money. The average cost for a home inspection can range anywhere from $200 – $500 but this is a small price to pay that can potentially save you thousands of dollars in the future. If the inspector does find any issues with the home, you can use it as a bargaining tool for lowering the price of the home.
A home inspector’s sole responsibility is to provide you with the information you need to make a more well informed decision on whether to buy or not. Make sure to shop around for a highly rated home inspector and if possible stay clear of home inspectors that may be associated with either the buyer or seller to avoid getting a biased opinion. Just remember it’s better to spend the money up front on an inspector than to find out later you have to spend a fortune.
10. Understand What You’re Signing
The last thing to do in the home buying process is to sign the paperwork. Now before you rush into signing the required forms you’ll want to request draft copies of any documents in order to preview before the actual closing date. Your real estate agent or mortgage broker should be able to provide you with these documents.
Being able to have the time to look these forms over prior to the actual date will help ease the pressure of the actual process because you would have had time to make sense out of what you are signing.
If you don’t understand something about the paperwork or process don’t be afraid to ask questions, that’s why you hire agents and brokers to make sure you fully understand what you’re getting into. Pay special attention to any numbers that might be on the forms. All you need is a couple of wrong keystrokes that can cause big problems down the road.
To feel more confident in what they’re signing, some buyers even hire a lawyer to represent their interests during a closing process and explain any legal jargon in layman’s terms. Others bring along a parent or trusted friend who’s already gone through a closing process, with them.
If you still don’t feel confident about what you are signing then you can hire the services of a lawyer that will walk you through the process and explain any legal jargon you may not understand. You could also ask a family member or friend that has gone through the process before to come along and help you understand better.
Buying a home is a big life changing event, but doing your research and involving the right people can make your home buying experience less stressful and much easier to getting you into your dream home faster.