Buying a home for the first time can be both exciting and stressful. The great news is that there are precautionary methods you can utilize to better relax during this thrilling time in your life. It all starts with a checklist that you can tick off as you go through the home-buying process. Here’s our recommended checklist for home buyers who are venturing into the real estate world for the first time.
1. Determine a Budget
House hunting can be a fantastic thrill. From front porch aesthetics and granite countertops to bathroom tiles and more, one can no doubt get lost in the whirlwind of finding your favorite space to call home. However, there are several things that need to happen before you can actually buy a home.
Step one is determining a price range and establishing a partnership to secure the funds needed to buy your desired new home. This is where it is crucial to determine what you can truly afford in terms of monthly payments combined with the amount you can put down on a house. If you already have the funds, then you can worry less about this step. But most people will need to borrow money from a bank to be able to afford the house they would like to purchase.
Within this step, a bank will usually tell you what you are pre-approved for based on a few key aspects of your financial situation and employment status. This predetermined number can help guide you on your search for a new home. Keep in mind that this number is not quite set in stone and can change depending on a few things. For example, if you have switched jobs recently, this could affect the amount you were originally pre-qualified for.
Estimated Mortgage Payments
Here are the three elements you can expect when it comes to what your mortgage amount will consist of:
- Principle – This is the amount required in order to pay off your debt.
- Interest – This is the interest rate amount set by the bank so that they can make money off of the amount loaned.
- Escrow Account Certification – This is a small amount taken from your mortgage that is placed into an account monitored by your bank to cover property taxes and homeowner’s insurance.
2. Find a Real Estate Agent
After you have a good idea of how much you can and are willing to spend, it is highly suggested that you find an agent. As someone who works in the real estate field every day, the process of purchasing your home will go much more smoothly than bracing the workload alone. Find your ideal realtor by taking into account the area you want to live in, and asking a ton of questions. Your realtor should be open to sharing information and advice on your potential purchase.
3. Make an Offer
Once you have house hopped and found your dream home, you will want to make an offer. You will provide a price you are willing to pay plus any contingencies you may have. These contingencies can include things like recarpeting the living room, fixing the plumbing, repainting the walls, and other such things that you would like to see done before you move in. Although this seems like a fairly final step, an offer does not guarantee the house is yours.
4. Accept Offer
In the next phase of placing your offer, it will either be accepted or counter offered by the seller. This counteroffer can change things in a few ways including:
- Offering a higher or lower amount to sell the home for
- Agreeing to meet some or all contingencies
- Disagreeing with some or all contingencies
At this point, you can decide whether you can agree to the countered terms laid out by the seller. If you feel it is not worth it to continue, you may back out of your offer. Once you and the seller have come to an agreement, you can check off making an offer when it has been accepted on both sides.
5. Navigate Through Escrow
Huzzah! You are now in escrow. At this point in the home buying process, it is important that you do the following necessary steps:
- Secure your mortgage – Solidify the amount given to you by the bank by providing all of the essential documentation needed so that they can reach a definite amount.
- Administer a property inspection – Make an inspection appointment as soon as possible to get a professional opinion on the true state of the property.
- Address any issues – If anything new arises because of the inspection previously done, now is the time to address them to the current owner. Here is where you may discover problems that could be a make or break.
- Get homeowner’s insurance – Once you have decided to go through with your purchase, you will need to provide proof to your mortgage lender that you have insurance to cover both yours and their investment. This is usually known as a Certificate of Insurance.
6. Close on Your New Home
Once you have made it out of escrow, you can finally close on your new home. You and the seller can now agree on a date of sale (closing date) and ownership can begin to change hands.
Closing costs are also part of closing and will need to be paid before you can begin to move in. Closing costs consist of a number of things but normally include paying realtors and the title company for their time and effort used to help you find a home, one year’s worth of homeowner’s insurance, and other fees. Once these have been paid successfully, congratulations are in order! You are officially a brand new homeowner.
Source: A Complete Checklist for First Time Home Buyers | Shawn Manderscheid (realestatehouston.com)