9 Must-Do’s for the First Time Homebuyer

Congratulations on planning for your future and looking into purchasing a home.  There are things prospective first time homeowners can to make your first transaction go as smoothly as possible.

  1. Talk to a Lender – This step is essential!  Not only will a lender be able to give you a price range, they will also be able to talk to you about the different loan options.  There are often first time home buyer incentives that can help minimize or even eliminate the down payment and/or closing costs.
  2. Start Saving Today – The more you save before purchasing a home, the less interest you’ll pay for the life of the loan.  Even $50-$100 per month makes a difference.  Also, though not required, saving enough to make a 20% down payment means not having to pay for mortgage insurance, saving you money in the long run.  First time homebuyer may qualify for loan programs with lower down payments.
  3. Improve Your Credit – Any lender should be able to look at your current credit situation and give you tips for improving your credit score.  These tips may be as simple as making a large payment on only one card for this month and putting your expenses on different cards to diversify your credit across multiple cards.  The better your credit score, the better chance you have of getting the best possible interest rate.
  4. Prioritize – You have been to a lender and received a pre-approval, now it’s time to get realistic.  You have lots of options and your search will go more smooth if you are able to narrow things down a bit before beginning your search.  Do you want to live in a smaller house that’s full of character or condo in a swanky neighborhood downtown that is close to all the great restaurants, festivals, and boutiques?  Do you prefer to be in the suburbs where homes are larger but all quite similar, yards are larger than in the city but more manageable than a rural lot, and shopping is convenient?  Or is a rural location with a large lot and few neighbors your ideal?
  5. Establish a Budget – How much you’re comfortable spending and how much you’re approved to spend are probably two different figures.  Think about how much you spend on housing now, include utilities, cable, internet, etc.  Now realistically, can you comfortably afford to spend more than that and still have enough money to contribute to a rainy day fund, retirement fund, etc.?  Write down the total amount you are comfortable spending each month.  If this number is lower than your pre-approval amount, this is what you should use to set your price point.
  6. Choose a Realtor – Ask friends or coworkers for recommendations if you don’t already have one picked out.  Set up an initial meeting to make sure your personalities mesh.  You may or may not talk about real estate much at all during this getting to know one another meeting.
  7. Sweat Equity – Yes, you can hire people to move your furniture, paint your home, professionally clean your home, etc.  But those costs may be unnecessary.  Sweat equity can save you money.  If you can devote a couple days to painting, a day to renting a carpet cleaner, and a few days to packing your own moving boxes, you can save hundreds if not thousands of dollars.  Start helping your friends move today, then you’ll be able to ask them for a hand when it’s your turn to move.  All that extra money can be used to start a rainy day fund or for furniture and decor.
  8. Trust Your Instincts – When you find the perfect home for you, you’ll know.  The location, price, and home itself will just feel right.  You may know it’s the one for you before you even go look.  Go look anyways.
  9. Take Your Time – There’s always another house.  Take comfort in that.  If for whatever reason the first one does not work out, there is always another house.  Buying a new home is emotional.  All too often, eager buyers want to bite at the first property they think they love.  If you find that first property in the first week of your search, chances are you’ll find others that fit your criteria as well, and you may end up liking them more.  Relax.  Hope for the best, but know that there’s always another house.

I’ve decided to buy, now what?

Congratulations on the decision to purchase a home!  You’ve made the first step, now what?

Home Buying Process

  1. Consult your Realtor.  Don’t have a Realtor?  Email me.  I have an extensive network of excellent Realtors with whom I’d be happy to put you in touch.
  2. Speak with a lender.  Your Realtor may require that you’re pre-approved before going to look at homes.  Why?  Two reasons.  First, falling in love with a beautiful home only to find that it’s unrealistic stinks!  Second, in a strong market, often sellers require buyers be pre-approved.  We don’t want you to miss out on your dream home because you had to wait till Monday to get pre-approved and could not submit an offer.
  3. Start the search!  In looking at homes, the more honest you are in discussing your likes and dislikes, the better your Realtor will be able to meet your needs.
  4. You’ve found the home!
  5. Offer to Purchase.  Your Realtor will discuss your price, terms, and conditions and will submit an offer to purchase.
  6. Negotiations. If your offer is accepted, you skip the negotiations step.  If the seller presents a counter offer, you and your Realtor will discuss the counter and negotiate until an agreement is reached.
  7. Offer accepted!  Or go back to #3, but hopefully not!
  8. Due Diligence period begins.  Your agent will help you coordinate inspections, a survey, obtaining insurance, selecting a closing attorney, and applying for a loan (if not a cash offer).  The lender will order an appraisal, the closing attorney will complete a title search, the loan application will go to underwriting, and be approved or declined.
  9. Negotiate repairs.  Negotiate any repairs that came up during the inspection, survey, or appraisal.
  10. Schedule a closing date
  11. Final Walkthrough
  12. Closing day!  Deed is recorded, possession is transferred, the home is yours!  Congratulations!

This may sound complicated, but a good Realtor with clear communication and expectations can make this a relatively painless process.  After closing, your Realtor can be a wealth of information about anything from a good lawn service to restaurant recommendations to maximizing your renovation budget.  You just need to ask!