Buying your first home can be a daunting task. But millions of people have been there before you and survived. If you do your homework, you'll have the best possible chance of finding a place you can afford for a price you can handle. The big surprise for many first-timers is that they need to finish the first five steps on this list before they can even begin to look for a home.
1. Review your financial health.
Before clicking through pages of online listings or falling in love with your dream home, do a serious audit of your finances. First look at savings. Don't even consider buying a home before you have an emergency savings account with three to six months of living expenses. Look at how much is left over in your savings and investment accounts that could go toward a down payment. Next, review exactly how much you’re spending every month – and where it’s going. This will tell you how much you can allocate to a mortgage payment. As you research neighborhoods, factor in how moving would change your transportation costs to work.
2. Check into benefits for first-time home buyers.
Before you start meeting with lenders, it's good to know what constitutes a good deal. And that includes looking into special programs that might make it easier for you to find a property you can afford.
3. Meet with lenders.
Many realtors will not spend time with clients who haven't clarified how much they can afford to spend. And in most instances, sellers will not even entertain an offer that’s not accompanied with a mortgage pre-approval. That's why – if you don't have all cash (how many first-time buyers do do?) – your next step is talking to a lender and/or mortgage broker.
A lender or broker will assess your credit score and the amount you can qualify for on a loan. He or she will also discuss your assets (savings, 401(k), etc.) and debt, as well as any local programs that might be available for down payment assistance. That's where your homework on first-time home buyer programs can help. If you think you qualify, look for a lender that handles the program you hope to get.
4. Shop around for a mortgage.
Don’t be bound by loyalty when seeking a pre-approval or searching for a mortgage. Fees can be surprisingly varied. For example, an FHA loan may have different fees depending on if you’re applying for the loan through a local bank, credit union, mortgage banker, large bank or mortgage broker.When you've gotten the best deal you can, get a mortgage pre-approval so you know how much house you can buy.
5. Have a back-up lender.
Qualifying for a loan isn’t a guarantee your loan will eventually be funded: Underwriting guidelines shift, lender risk-analysis changes and investor markets can alter. Having a second lender that has already qualified you for a mortgage gives you an alternate way to keep the process on, or close to, schedule
6. Find a realtor.
Once you know how much you can afford and the loan amount you’ll qualify for, it’s time to find a real estate agent. Look for one who works with a team of people who can offer suggestions about home inspectors, insurance agents, etc.
7. Decide on a neighborhood.
You'll probably have an ideal location, but keep an open mind as you see how much house you can buy in different areas. Homes and land are less expensive the farther they are from a metropolitan area. On the other hand, imagining that the long commute won't matter that much is an easy trap to fall into. The stress and costs of a long commute can undermine marriages, finances and mental health. Use the calculator in step 1 to see what that extra trip could add to your monthly bill.
8. When you find a property, crunch your numbers again.
If you're thinking about making an offer on a home, take another look at your budget. This time factor in closing costs, moving expenses and any immediate repairs and appliances you may need before you can move into the home, notes Felipe Pacheco, a division manager of Primary Residential Mortgage Inc. (PRMI), who is based in Salt Lake City. Don’t overlook hidden costs such as the home inspection, home insurance, property taxes, homeowners association fees and more.
9. Look over utility bills.
First-time home buyers are often moving from rentals that use less energy (gas, oil, electric, propane, etc.) and water than a larger new home will. It is easy to be ambushed by soaring rates when your new house has ceilings higher than your rental – or older windows that leak air. Then there are unexpected utilities, such as buying gas to power a lawnmower. These costs can blow a budget.
10. Don’t forgo a home inspection.
After your offer has been accepted, splurge for a home inspection. Spending even $500 can educate you about the house and help you decide if you really want to pay for necessary repairs. You can also leverage your offer depending on the results of the inspection report and make the seller financially responsible for all or some of the repairs.
The Bottom Line
Purchasing your first home is perhaps the biggest financial decision you’ll ever make. Don't take on more of a financial obligation than you can handle. A small stretch may be worth it, but a big one could haunt you if life gets temporarily bumpy.
Source: "10 Steps For First-Time Home BuyersBy Gina Roberts-Grey"
Author:Richard Emanuele Phone: 702-506-4090 Dated: September 8th 2017 Views: 147 About Richard: Richard Emanuele is a top Producing Real Estate agent who holds distinguished designations such as: ...
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Team Emanuele was established in 2009 by Richard Emanuele. He has chosen a select group of Real Estate professionals that have made it their mission to consistently offer excellent service while helping buyer's and sellers with all of their Real Estate needs. They continue to be a top producing Real Estate firm throughout the Las Vegas Valley, Henderson, and North Las Vegas areas. We have the experience and expertise to help you with Short Selling, Probate Sales, Divorcee Sales, or listing a home that's in an equity position. We work with first time home buyers, buyers looking relocate locally or from out of state, Investors who are buying and flipping or buying and holding, both residential, commercial and land development. We are a full service Real Estate firm. We look forward to earning your business. Are motto is " Expect Excellence"
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