If anyone knows how difficult being a first-time home buyer can be, it’s us. There are so many steps, tasks to complete, requirements, and documents to fill out. Many people looking to buy are anxious about the process because, more often than not, this is the biggest financial decision they will ever have to make. However, we want to encourage first-timers not to be afraid of the process and enjoy some of the advantages of buying for the first time.
To make this process a little easier and clear up some of the mystery, we’ve compiled a brief overview of what to expect from the buying process. Hopefully, these tips will help ease some of your worries and make life a little easier before buying your first home.
Your Go-To Guide As A First-Time Home Buyer
Thinking of buying your first home? Here’s everything you need to know to get started.
First Things First – Get Pre Approval
All first-time home buyers feel both the exhilaration and the fear that comes with buying a home for the first time, and it’s no surprise you’re here looking for tips. Our first piece of advice? Shopping for a home, no matter your budget, without getting preapproved for a mortgage is a big mistake.
Getting preapproved before you even start looking for a home can help you in a variety of ways. First, it ensures that you have the financial ability to purchase a home, and also makes sure that you know how much you can actually afford. In addition, it lets real estate agents know that you are serious about buying a house.
Shopping for a home before you get approved runs the risk of finding homes that you love that aren’t in your price range. This means you find a way to buy a house you really can’t afford or every other house you look at is a disappointment. Instead of getting your hopes up, start by evaluating your finances and talking to a mortgage lender. Then create a list of must-haves and deal-breakers for the home that you want, so that when you get that pre-approval letter, you’ll know where to start looking.
Consider The Costs of Home Ownership
Like we mentioned above, it pays to know the state of your finances before you really start to look for houses. Any first-time home buyer needs to consider the true costs of homeownership. For example, your down payment requirement will depend on the type of mortgage you choose and the lender. Many lenders offer first time home buyer loans that allow as little as 3% down. But even a small down payment can be challenging to save for. A 3% down payment on a $300,000 home is still $9,000.
Another thing that a lot of people don’t consider is the closing costs. There are the fees and expenses that come with finalizing the mortgage, and they can range from 2% to 5% of the loan amount. Sometimes you can ask the seller to pay a portion of these closing costs and shop around for some of those other expenses that come up. Some other expenses might include having the home appraised, getting a home inspection, running a title search, private mortgage insurance, and other surveys. Ask your real estate agent for all of the ins and outs when it comes to closing costs.
Don’t forget any immediate move-in expenses! You’ll want to make sure you have some funds after moving in for home repairs, upgrades, and any new furnishings you might want.
Choose The Right Real Estate Agent
Another important aspect to consider when you are a first-time home buyer is to make sure you choose the right agent. The right agent will be able to meet all of your needs and guide you through the entire process.
Make sure you have a connection and mutual trust with your agent. Get referrals from your friends and family and ask them about their experience. Then ask your potential real estate agent about their process for first-time home buyers.
Pick The Right Type Of House And Neighborhood
With the help of your agent, the next step is to find the right house in the right neighborhood. Think about your long term needs and whether you need a starter home or a forever home. If you’re thinking about starting a family or expanding your current one, then it might make sense to buy a home with a little extra room.
You’ll also want to weigh the pros and cons of different home types, and knowing your lifestyle and budget will help you. Though condos and townhomes are more affordable, sharing walls and having neighbors close by means less privacy. Maybe you’ve found the perfect neighborhood but can’t afford a move-in ready home, in which case a fixer-upper might be your best bet.
Whatever you choose, make sure you check out the neighborhood thoroughly. It might even be a good idea to test out the commute from your home to your workplace or your children’s schools.
Make An Offer and Close On Your Home
When it’s time to make an offer, your real estate agent will help you decide how much is fair to offer for the house, along with any conditions you might want to ask for. Your agent will contact the seller’s agent and do all of the negotiating for you. Offers and counteroffers will be handled until ultimately, an agreement is reached. Once you reach an agreement, you will then make a good-faith deposition, and the process will then transition into escrow. Escrow is the short period of time during which the seller takes the house off the market with the expectation that you will buy it – provided you don’t find any issues with the house during the inspection.
Once you reach an agreement, and there are no serious problems with the inspection, you are ready to close! Closing is the process of signing a ton of paperwork in a very short time period, and your Realtor will help you make sure everything goes smoothly.
Let 41 Realty Group Help You Find The Perfect Home
First-time home buyers shouldn’t be afraid of the complex process because you’ll have a real estate agent on your side to help you with every step of the way. Hopefully, you have a better idea of what to expect so that when you’re ready for this fun and life-changing commitment, you’ll be ready. At 41 Realty Group, you’ll find a team of agents who love helping others make Billings their home. Give us a call or contact us online to let us help you start this process.