Wow, you’re taking a big step and considering the purchase of your first home. Scary as it seems, this may be the best time in recent history to purchase a home, with rates still at record lows and a large inventory of homes to choose from.
Here are a few simple steps to help guide you through the maze of buying your first home.
- Is now the right time? You may be moving because of a job transfer or to be closer to family. Or, you’ve been living in an apartment and you need the privacy of your own place. It’s always a good idea to get more familiar with a new location before you decide to purchase a home – local Realtors who know the Neighborhood can be a huge help. See additional Tips on Buying Your First Home.
- How are your finances? There are many financing options available, but some require a substantial down payment and excellent credit. Most lenders have tightened financing guidelines in the past several years and good credit is critical with mortgage companies scruitinizing every facet of your financial history. Make sure all of your credit cards, car payments, etc. are paid on time or paid off for at least a year before your decide to purchase.
- Get pre-qualified with a Lender – Since most of us don’t have all cash to purchase a home, you will need to line up financing for your purchase. It’s helpful to have a Lender look over your finances and your credit scores prior to making an offer. Reputable Lenders can help you check your credit, offer financing options, like an FHA loan, which allows the smallest down payment of 3.5%, and has less stringent credit score guidelines than a conventional loan, and can provide a Pre-qualification Letter, for a loan within a certain price range. Sellers look move favorably on offers from Pre-qualified Buyers.
- Contact a Local Realtor that specializes in the area you want to buy – Buying a home can be pretty complex. It’s easy to look at properties online, but purchasing a home involves considerable expertise and local knowledge. There are many steps involved, including financing options, contract stipulations and deadlines, real estate terms and State Laws, negotiating, inspections and many other details that a professional Realtor can help you negotiate from contract to closing.
- Go find your “Dream Home” – As you begin your search, make a list of the things that are most important – i.e. 3 bedrooms/2 full baths, school district, closeness to work. There are many properties on the market, but many will not meet your needs, may be in the wrong area, or not in your price range. Work with your Realtor to find homes that fit most of your needs. Remember, there are very few “perfect” homes, so you may have to compromise on a few of your wants, but your will ultimately find a home that suits most of your criteria.
- Make the Offer – Here are the basic steps. You’ve found a home that you want to purchase:
- Determine what price you want to offer and include all stipulations – when you want to close, inspections, financing contingencies, etc.
- Your Realtor will prepare the contract and present the offer to the Seller
- The Seller can accept the offer, reject the offer, or counter the offer
- Once the offer has been accepted, you will need to complete your loan application with the Lender, schedule the Inspections, and be ready to close on the appointed date
- Closing Day – You and your Realtor, and sometimes your Lender, will meet at a designated Attorney’s office to sign the paperwork and complete the transaction. It’s important to remember that the Attorney does not represent you or the Seller, but your Lender. You are required to bring Certified Funds for your down payment and costs, or a wire transfer (now the preferred method) to the Closing. The Attorney will check the title and prepare the documents with your Lender. All taxes on the property will be pro-rate and paid at the time of the Closing. After you have signed all the paperwork, you will be presented with the keys to your new home!