Let’s face it. Buying a home will be one of the largest investments you will make in a lifetime. Be sure to do your homework and ask friends, family, and trusted professionals about what’s in your community for first-time homebuyers. Educate yourself on the ins and outs of purchasing a home. Here are a few tips to help you home search with ease. Happy Hunting!
CRITICAL FIRST STEPS
Make sure you’re financially ready. Buyers should start by reviewing their finances and checking their credit score. You can obtain free credit reports from AnnualCreditReport.com, the federally authorized source for free credit reports from the three major credit bureaus: Equifax, Experian, and TransUnion. Many lenders can also provide a ‘soft credit check.’ This type of inquiry generally does not affect your credit score. Calculate what you feel you can comfortably afford on a monthly basis. Review your finances in detail. Be sure to include your monthly income and your total monthly debt. Lenders consider your debt-to-income (DTI) ratio when determining whether you qualify for a mortgage and how much they may be willing to lend. Lenders use your income, debts, credit history, and other financial information to evaluate your ability to repay a mortgage.
SAVE, SAVE, SAVE 💰💵💵💵
It’s a common misbelief that all home buyers will need 20% for a downpayment. There are a variety of programs that offer as little as 3% down on the purchase price. However, it is important to also save for upfront costs, such as an earnest money deposit to secure a property, REALTOR fees, prorated taxes and closing costs. Depending on which state you purchase in, you may need an attorney to represent you to close, as well.
Factor in all additional expenses other than just the cost of the property. Make sure to keep in mind if you plan on doing any immediate improvements once you purchase a home. If you’re buying land, also consider costs such as a percolation test, surveying, site preparation, and contractor expenses. Once you close on a property, it’s YOURS. Compare it to driving a car off a lot. You will now be responsible for 100% of all costs!
FINDING A TRUSTED REALTOR
Finding a trusted REALTOR can help you navigate each step of the home-buying process and make the experience less stressful. Interview several licensed real estate sales professionals and work with the person you feel is best suited to your needs. How knowledgeable are they of the market you’re looking into? Are you comfortable talking about your personal finances with them?
Ask prospective realtors what their availability is when you have questions or just need some reassurance. Understand the difference between a real estate agent and a REALTOR. Real estate agents are licensed by the state in which they practice. In addition, they must work under a licensed broker. The main difference is a Realtor must belong to NAR – National Association of Realtors. REALTOR® is a trademarked term used by real estate professionals who are members of the National Association of REALTORS® (NAR) and agree to follow its Code of Ethics with additional education requirements. REALTORS have access to the MLS (Multiple Listing Service). This is super critical as it provides a comprehensive search for properties.
CONNECT WITH A LENDER
Get preapproval for a mortgage. Find a lender that is familiar with working with first time homebuyers. You may begin checking with your bank or credit union. There are many funding opportunities, such as grants, for first time buyers. Many states and local governments offer assistance with down payment, closing costs and other benefits. Each institution may offer different options. Be sure to ask about the interest rates.
A stronger credit profile may help you qualify for more favorable mortgage terms, although interest rates and loan eligibility depend on multiple factors. Ask what types of loan you qualify for. Eligible borrowers may qualify for certain mortgages with no down payment, including some VA and USDA loans. Be specific on what you’re looking for and be sure to ask questions! “A professional home inspection can help identify potential defects, safety concerns, and maintenance issues before you complete the purchase. Once you follow all of the steps your lender will guide you through, then get a preapproval in hand to start your home search!
HOME SEARCH
Once you have established a comfortable budget, desired location, have a preapproval in hand and connected with a trusted REALTOR, you are ready to begin looking at properties. Each buyer has a preference on what they are looking for. Location, school district, city vs rural living preference are all common elements when looking for a home. Be sure to look at all of the expenses, including tax costs.
Many areas have HOA fees, which stands for Home Owner’s Association fees. It is important to know what they cover. What will you be paying in total taxes? Depending on the property and location you may have additional costs, such as village tax. If in an HOA unit, will you be paying separately for utilities, such as water and trash removal? Check the age of the roof, HVAC, hot water tank and anything that would be a large expense to the new homeowner. Keep in mind that anything considered a personal preference generally will not suffice for a credit or seller’s concession. This may include carpet or a paint color the buyer is not happy with. Any cosmetics within the home.
NEVER SKIP AN INSPECTION
Never skip a home inspection! As a new buyer, you will want to make sure that the home is safe to move into. Be sure to use a licensed home inspector and have them check the safety and structural stability of the home. Potential concerns may include mold, radon, asbestos, or other environmental hazards. Most properties that were built prior to 1978 are required to supply a lead disclosure to the buyer. Make sure the structural integrity is fully examined. This includes the foundation of the structure, walls, ceilings and floors. Little tip… always look up when viewing a home. Do you see any water stains? This is a big heads up showing there may have been a leaking roof, or bad pipes.
Always ask! How is the roof and exterior? Look for missing shingles and deteriorated siding. This may call for a large expense down the road. Inspectors will check all wiring, panels, and outlets showing any fire hazards. Plumbing and HVAC will be checked for any leaks and to make sure the heating/cooling systems function properly. Smoke and carbon monoxide detectors should be checked for proper operation. Carbon monoxide detectors can alert occupants to dangerous levels of the odorless gas. Inspectors will also check things such as handrails and proper vent sealing. All of these factors will keep your mind at ease and family safe. 🙂
HIRE A REAL ESTATE ATTORNEY
Attorney involvement in residential real estate transactions varies by state. In states such as New York, attorneys commonly play a significant role in the contract and closing process. Even if it’s not a requirement in the state you’re looking to buy, it’s highly suggested to hire a legal professional to make sure everything is in check. They help by protecting the client’s best interests, ensuring compliance with local and state laws. Attorneys will review the purchase contract, conduct title searches, verifying the transfer of ownership and ensuring everything is recorded properly.
Home buying can be an emotional process. You want to have a team you can lean on completely. Find a trusted real estate professional who knows the market where you’re looking to buy, and connect with a lender who can guide you through financing. A qualified home inspector can help identify potential problems with the property, while a real estate attorney can provide legal guidance when appropriate or required.
