Buying your very first home can be one of the biggest financial decisions that you will ever make in your lifetime, so it’s best to be thoroughly prepared to prevent problems and headaches along the way. Here are some tips for first-time homebuyers:
1. Before you even start looking around
- Create a green file that consolidates all your financial documents in one place, as you’ll need this in order to secure financing. This green file will contain your bank accounts and statements, credit cards, tax returns, investments, insurance, and other important financial documents.
- Check your credit rating with a lending institution to find out just how much you can afford. Your credit score will have an impact on the type of property you can buy and at what price.
2. How to choose your real estate agent
Navigating the complex real estate market can seem a bit frightening for beginners, but not if you work with a real estate professional.
- Choose an agent who has plenty of experience in successful transactions, is knowledgeable and highly familiar with the areas where you want to live, keeps up with the latest market trends, and most importantly, promptly replies to your calls and inquiries.
- Choose an agent who is attentive to all your concerns, and is one that you feel comfortable with.
- Choose an agent who is up to the task of providing you with access to extensive property listings, processing the necessary paperwork, and guiding you in making informed decisions, as well as steering you away from potential disasters.
3. What you need to know about loans and mortgages
- Know what kinds of loans are available so you can determine which suits you best.
- Compare each mortgage type and carefully consider their pros and cons; your agent will help answer most of your questions about these loans and guide you to the best possible option.
- Get a pre-approval letter from a lender if you can to help you search for the home you want faster, since you know exactly how much you can afford. A pre-approval letter also tells sellers that you’re a serious buyer because you’ve already started getting financing.
4. Start looking for your home
You can save hours and even days of searching by just focusing on homes with the features you need.
- Make a list of the features you really want so you can narrow down your choices and find homes faster.
- Learn more about the neighborhoods that you plan to live in by researching online. Find out if the home you’re interested in is close to areas important to you like schools, shopping, or access to main roads.
- Drive around the area so you can see for yourself if the community is right for you.
5. Make an offer and negotiate
- Your real estate agent will help you make an offer that the seller will consider when you’ve decided on the home that you really want.
- Be ready for counteroffers or even rejections, but keep in mind that these are all part of the negotiating process and your agent will ensure that they’re watching out for your best interests.
6. What Inspections, Escrow, and Closing mean when buying a house
- Do a home inspection as soon as possible, which will tell you if there are problems with the house. This will allow you time to renegotiate or even cancel.
- Once you and the seller sign the purchase agreement, the escrow process begins. That means having a neutral third party hold on to titles, deposits, and other funds and documents until such time that all the conditions you and the seller agreed to are met. Your agent will make sure that everything proceeds smoothly and on time.
- The deed and keys to the property will be handed to you on closing day when your loan has been successfully processed. The deal is done and you are now the owner of your very own home.