Looking for Your First Home? Where to Start
Spring will soon be approaching, which means that more sellers will be putting their homes on the market. For first time home buyers, now is the time to get your ducks in a row if you plan to make your first purchase in the next few months. Nearly 32% of all buyers are first time home buyers, and many don’t know how to start the process. Here are some things you should be doing now to get into your first home.
Figure out what you can afford.
One big mistake that first time home buyers make is not knowing what they can afford. If you start house shopping before you know your budget, you will be setting yourself up for disappointment. You might find the perfect home only to discover that there’s no way you can afford it. This can spoil the first time home buying experience because you will compare that dream home to everything you see. It will then take you longer to find something, or you won’t be satisfied with what you end up in.
Sit down and figure out what you can afford for a down payment, monthly payments, interest, closing costs, insurance, and improvements or repairs—all of which you will probably need money for in your first home. You will need to take all of this into account to know what number is realistic. And don’t forget about other increasing expenses that you may not have had before, such as a water bill, trash removal, home maintenance, or other utilities that a landlord previously covered.
Get a mortgage pre-approval.
Once you figure out what you can afford, you will need to talk to a mortgage lender before you begin house hunting. Nowadays, many realtors won’t show you a home until you’ve secured a mortgage pre-approval. That’s because what you think you can afford and what a bank is willing to lend you may not be the same. You might not like the terms of a particular loan either, which will mean you need to shop around a little.
It can take time to find a lender, so start the process early. You don’t want to enter into a contract only to find that you can’t get a loan. You could lose the home you want and any deposit or earnest money you put down. And remember, once you get a pre-approval, don’t do anything to hurt your credit, such as making large purchases. You could jeopardize the sale if you do.
Find a real estate agent.
Some people might tell you that finding a real estate agent should be your first step. Oftentimes, a realtor can point you in the right direction to find a mortgage lender, help you figure out where you should even start searching for homes, and keep you realistic about what you can afford. You will also want a real estate agent that you trust, which isn’t always the one that’s selling the home at an open house you’ve wandered into.
Do your research when looking for a realtor. Ask family and friends. Search online. And read reviews. You should meet with a realtor and talk before you set up any showings if possible.
Do some pre-shopping.
Once you’ve figured out what you can (realistically) afford, you should start looking at the neighborhoods you think you can afford. Homes are usually similarly priced in each neighborhood, so that’s a good place to start. You can look online, drive or walk around, and start to get an idea of where you want to be. Is it close to work, schools, or shopping? Figure out what’s important to you in a community before you narrow it down to a particular home. Having specific criteria in mind for both the area and the home can help your realtor find something you will love.
First time home buyers don’t need to have a bad buying experience—just make sure to do some preparation before you start your search. Figure out what you can afford, talk to a lender, get a good realtor, and check out some neighborhoods before you start shopping. And, most importantly, remember to be open minded and realistic.