If you can start to familiarize and prepare yourself with what it takes to buy your first home before the process begins, it can help you navigate the real estate market with ease. Whether it’s your first time buying a home or you’re an experienced homeowner looking to invest, this list has you covered.
1. Start Gathering a Down Payment & Checking Your Credit Score
The first step to the home buying process is figuring out your finances. Purchasing a home requires a mortgage, where a lender fronts you the money, and you pay them back over time. To obtain a mortgage, you’ll need to put down some money. Ideally, a down payment on a mortgage should be 20% of the home’s price to avoid added fees. However, no need to worry if you don’t have that kind of money. For certain types of mortgages, a down payment can be as low as 10%, 5%, or even 0%.In addition to gathering a down payment, a first-time home buyer will need a decent credit score. The higher your credit score, the lower the interest rate will be on your mortgage. A lender will look at your recent history, your overall debt, the length of your credit history, and types of credit, such as bank cards, car loans, or student loans.
2. Get Pre-Approved for a Mortgage
Before house hunting, you should seek pre-approval from a lender for a home loan. You should meet with a few different mortgage companies and compare rates. Each lender will assess your financial background, such as your debt-to-income ratio, and use this information to determine whether they're willing to loan you money, and what size monthly payment you can realistically afford. This will help in the process of searching for a home so you can target the ones within your price range.3. Find a Good Real Estate Agent
A quality real estate agent should be one that helps you find the right houses, negotiate a great deal, and explain all the nuances of buying a home that come along the way. You want to go with someone you trust – not just anyone. This person will be your lifeline through the home buying process, so it’s important it’s someone that has your best intentions for this considerable investment.4. Start Looking at Homes
Let the home shopping commence! This should be the fun part of the home buying process. It’s smart to make a list of your must-have features, wants, and needs in a home. Is it essential to have a fenced in backyard? Do you want to live in a good school district? Do you want a new home or a fixer-upper? Two-story or a three-story? The possibilities are endless. That’s why making a list of what you want in a house is crucial because it will help you determine what’s absolutely essential.Qualities to consider when purchasing a home:
- Bedrooms: Keep in mind how many bedrooms that you may need within the next decade. Do you plan to add to your family, or are you an empty nester? Bedrooms don’t always imply someone will be sleeping there. You can utilize bedroom space for an office, gym, extra closet, or hobby room.
- Storage space: Consider how much space you need. Do you need a two-car garage or would a car-port suffice? Do you want a finished basement or one that can be used strictly for storage? Does your home include space for your hobbies? These are all things to think about when assessing the storage space in a future home.
- Privacy: Is the home located near a busy street or highway? Not only that, but consider the home layout in regards to both noise and privacy. Does the noise from the busy street find its way into the bedrooms? Can your neighbors see into your bathroom?
- Energy efficiency: Features such as low ceilings and new windows tend to keep heating and cooling bills low. High vaulted ceilings, while luxurious, and a larger footprint can cost significantly more in utilities.
- Yard: Would you like a deck or patio? Swimming pool? Hot tub? Built-in outdoor features such as a grill or cooktop? Is the size of the yard sufficient enough? Can you maintain the size of your yard or would a smaller one be better for your lifestyle?
- Kitchen: Are you someone that loves to entertain guests and need a good sized kitchen with enough cabinet and pantry space? Or are you someone that’s hardly ever home and the kitchen is not high on your priority list? Does it have hardwood flooring? Is the layout functional enough? The kitchen can be a main focal point of the house, so it’s important to put a lot of thought into how you might utilize the space.
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