Navigating through the homebuying process can be a nerve-wracking experience, especially for first-time homebuyers. But take heart. Millions of property rookies negotiate its unwieldy twists and turns each year. In fact, first-timers accounted for more than 30 percent of the total home purchases in 2015, the National Association of Realtors reported.
Buying your first home is doable, you just have to break this life-changing act into easily-digestible steps.
1. Conduct a financial review
To kick off the process, take a look at your finances to see if you’re actually prepared to purchase a home. According to Investopedia, prospective buyers should first assess their savings. If you lack an emergency fund, hold off on the house hunt. This will give you time to build up some semblance of a savings store. Experts suggest saving enough to cover the cost of living for 3-6 months.
Next, review your month-to-month expenses to find out what size mortgage payment you can comfortably afford. Make sure you build a detailed budget. You don’t want to base your homebuying decisions on skewed financial data.
Close out this step by obtaining a fresh credit report and score. You’re entitled to one free annual report by law, reported Zillow.
2. Hunt for a mortgage
Find a loan officer to help you determine the best mortgage loan product for you. The process is simple: your lender reviews your finances and determines how much house you can safely afford.
Be prepared to start collecting some paperwork. Remember, this paperwork won’t be needed to apply for a loan:
- Copies of your driver’s license and Social Security card.
- W-2 tax forms from the last two years.
- Federal tax returns from the last two years.
- Recent pay stubs.
- Employment verification.
- Bank and investment account statements.
3. Choose a realtor
Selecting a real estate agent is your next move. According to Money magazine, the best agents not only know the local housing market but also consider buyer financial constraints when searching for properties. Make sure your realtor belongs to the NAR, which enforces a strict code of ethics.
Real estate agents should know key market metrics and be able to list applicable properties or neighborhoods that fit at least some of your search criteria. If after consulting several agents you’re still unsure, ask for help from friends or family members.
4. Pick a property
Now comes the fun part: house hunting. But, before you start cruising neighborhoods, sit down and think up key variables that could impact your choice. Are you planning to start a family? Do you foresee any coming career changes? Envision how you might live a decade or more down the line.
Once you start pounding the pavement, assess more than structures – take in the surroundings. According to HGTV, you should decide whether or not the outdoor space encircling a prospective home meets your current and future needs. If you come upon a home with a perfect view, consider looking into construction plans for nearby buildings to insure that your vista won’t be blocked.
Additionally, consider the local schools and municipal services. You might also want to look into neighborhood codes. For instance, if you’re looking at a home in a neighborhood with a governance board, be prepared to spend time pruning your yard to meet their exacting aesthetic requirements.
Of course, home construction is of supreme importance. Ensure that you find a home with features that meet your expectations. If you come across a property that works but needs a little work, don’t shy away from remodeling, especially if it’s is below your price point.
5. Seal the deal
After you’ve chosen your new home, make sure to take care of some simple maintenance. Call in a home inspector to assess the structural condition of your new property. Often, inspectors reveal minor problems that give homebuyers enough leverage to drive down the final sale price. Also, schedule a land survey to determine the exact dimensions of your property.
Finish off the whole deal by paying your closing costs and obtaining final approval from your lender. Then, ready the moving truck.