In the market for your first home? You’re about to enter a world of open houses, negotiations, contracts, some surprising numbers, some not so surprising, a lot of words you don’t know, and so much paperwork. Like, a lot.
Buying a home is an emotional roller coaster, with a few not-so-fun surprises along the way. However, if you know what to expect and go in prepared, the process will ultimately be one of the most rewarding experiences of your life.
It’s normal to feel a little anxious. After all, this is likely the biggest purchase you’ve ever made. But don’t worry, we’re here to help! To set your mind at ease and get you started on the right foot, we’ve put together a first time home buyers’ checklist. This comprehensive guide will touch on what to expect when buying your first home, from start to finish.
Happy house hunting!
First Time Buyer Checklist
Find Out What You Can Afford
One of the first steps (if not *the* first step) you should take when buying a home is to find out how much house you can actually afford. This number is usually determined by your debt-to-income ratio, which is the percentage of your monthly pre-tax income that goes towards debts and other obligations, like student loans, car payments, etc.
To calculate your debt-to-income ratio:
- Add up all of your monthly debts (car payments, student loans, credit card bills, etc.)
- Divide that number by your gross monthly income (the amount you make before taxes are taken out)
*Your monthly mortgage payment should not exceed 28% of your gross monthly income.*
Make the Down Payment
The down payment is the portion of the home’s purchase price that you pay upfront, while the mortgage covers the rest. The amount you’ll need to put down depends on a few different factors, like your credit score, employment history, and debt-to-income ratio.
Often, the downpayment should be at least 20% of the home’s purchase price. But if you’re a first-time buyer, or don’t have a perfect credit score, you might be able to put down as little as 0-15%. But, of course, it all depends on the type of mortgage you qualify for.
Keep in mind that the more money you can put towards the down payment, the lower your monthly mortgage payments will be.
Get a Pre Approval for Your Mortgage
The pre-approval process is when a lender reviews your financial information (income, debts, assets, employment history, credit score, etc.) to determine how much money they’re willing to lend you.
Getting pre-approved for a mortgage will give you a clear idea of how much home you can afford, and puts you in a stronger negotiating position when the time comes to make an offer on a house.
Find an Excellent Agent
Your real estate agent will be your biggest ally throughout the home buying process. From start to finish, they’ll be there to offer their expertise, answer any questions you have, and help you navigate through what can sometimes feel like a daunting process.
When interviewing agents, pay attention to how well they communicate, whether or not they’re responsive to your needs, and how knowledgeable they are about the market.
Hiring an excellent agent is one of the most important steps you can take when buying a home.
Begin the Hunt
Now comes the fun part of our first time home buyers checklist: house hunting!
Start by getting a clear idea of what you’re looking for in a home. How many bedrooms and bathrooms do you need? What kind of layout are you looking for? Do you want a yard? Are you open to compromising on certain features?
Once you know what you want, your agent can start showing you homes that match your criteria.
Housing markets can vary significantly from city to city, so it’s essential to have a realistic idea of what kinds of homes are available in your price range. It’s important to note that houses that are priced below market value tend to sell very quickly, so if you see a home that you like, don’t hesitate to put in an offer.
Put Down an Offer
When you find a home that you want to make an offer on, your agent will help you put together a competitive offer based on recent sales in the area. Hiring a real estate agent who is experienced in negotiating can be helpful, as they may be able to help you get the home for a lower price.
Putting down an offer on a house is a big decision, so make sure you’re completely comfortable with the price you’re offering before moving forward.
Get a Home Inspection and Appraisal
Once your offer is accepted, you’ll need to get a home inspection and appraisal. The home inspection is an important step, as it will give you a chance to identify any major problems with the property before you buy it.
The appraisal is also crucial, as it will help determine how much the bank is willing to lend you.
Get Approved for Your Mortgage
The next step on our first time home buyer checklist is to get approved for your mortgage. The lender will review your financial information (income, debts, assets, employment history, credit score, etc.) to determine how much money they’re willing to lend you.
Once you’re approved for the mortgage, you’ll need to sign a loan agreement and pay any associated fees.
Hiring a real estate attorney to review the loan agreement is a good idea, as they can help explain any legal jargon and ensure that you’re getting a fair deal.
Close the Deal
The final step on our first time buyer checklist is to close the deal and officially become the owner of your new home!
Once you’ve signed all the necessary paperwork and paid any associated fees, the house will be officially yours. Congrats – you did it!
Now that you’ve bought your first home, it’s time to start making it your own.
Settle Down, You’ve Made It
While the home buying process can be stressful, it’s also an exciting time. By following this first-time buyer checklist and working with a good real estate agent, you can ensure that everything goes smoothly and that you end up in the home of your dreams.
Contact Eastern Title for All Your Title Needs
Whether you’re selling or purchasing a home, Eastern Title & Settlement is poised to represent your best interests and ensure that your transaction goes smoothly and swiftly, providing you peace of mind.
Our highly trained staff is ready to answer any questions you may have about the title process or other steps involved with buying or selling a home. We have the experience and knowledge to ensure that you have a successful closing.