Table of Content
- Determine how much savings is needed
- Decide how you will pay for your home
- Be pre-approved with a mortgage lender
- Have a real estate agent that will represent you
- Select your location
- Pick the home with your criteria
- See the homes in person
- Make your best offer
- Have your inspection and appraisal scheduled
- Close on your home
Buying your house for the first time may not be the easiest thing, so here’s a guide to help navigate your journey to your dream home
Determine how much savings is needed
First you need to decide how much you would like to spend and how much you are able to afford on your home. You will need to know how much you need to save for these expenses:
Down Payment
This is the largest portion of your savings that you will need to pay initially. Most people aim for 20% down, but you can contact the mortgage lender to help you determine different programs, even if you do not have the 20% down payment. There are different programs that can help first time home buyers for even as low as 3% down.
Closing Costs
This will be the cost for the expenses and fees that you will need to pay at the very end when you close and buy your home. Usually this is around 2-5% of the loan amount. There are some occasions that the seller can pay a part of the closing costs or pay for repairs determined from the inspection, so this can be something negotiable.
Decide how you will pay for your home
Make sure you know your finances
Credit report Check
Make sure you know your credit score before you apply for a mortgage loan. There are different ways to get a score through Equifax, Experian, TransUnion). If anything seems wrong, make sure to contact the credit bureau and let them know.
If you feel your credit score is not high enough, start paying off all bills, debts, and credit cards on time. Make sure to keep low balances on your credit card.
Assets
Other options can be to review your 401(k), sell your stocks to increase your cash amount
Mortgage Options
There are different mortgage types that the mortgage lender can review with you that might be the best fit for you
- Conventional mortgages
- FHA Loans
- USDA Loans
- VA Loans
Other Assistant type programs
Some states have programs to assist first time buyers in certain areas, so make sure to ask your mortgage lender if they may have this
Be pre-approved with a mortgage lender
You will need speak with an official mortgage lender to get a preapproval letter to know how much they will be able to lend you to buy your house. This preapproval amount is tentative. It will change once all the supporting documents have been submitted.
This letter is needed to be submitted to the seller to make an offer on your home of choice.
Have a real estate agent that will represent you
A real estate agent is important to help with your first time home purchase. Your agent will represent you and will be your advocate to answer any questions you have and guide you through the entire process of owning your home. If you have the right agent that represents you, the home buying process will be less stressful.
Select your location
Find the community and location that is best fit for you. Some questions that you may ask yourself are:
Is there easy access to the freeway to get to commute to your location of work?
How are the schools around the area? Are you close to schools with good ratings? This can boost the value of your home even if you do not have kids.
Pick the home with your criteria
Pick the type of home that you want:
- Single family homes
- Condominiums
- Townhouses
All of these homes should be decided on what is best fit for you and what fits you personally and financially. Having your preapproval letter can also help you decide which homes fit your budget. Tour different types of homes to see what fits you. Other possibilities could be newly constructed homes or even fixer upper homes that you can put your own designs to.
See the homes in person
Go see houses and see what you like inside and outside of the home. This will also give you an idea of how the home’s condition is. Some questions that you can ask the sellers are HOA dues (Home Owner Association dues), the age of the roof, or what needs to be fixed in the house.
Make your best offer
Once you find the home that best fits you, make your best offer. An important reason to have your real estate agent on your side, is to have an agent to represent you and help you through these negotiations with the seller and assist you through navigating through counteroffers. Negotiation power greatly depends on which market the real estate is in – buyer’s market or seller’s market.
Have your inspection and appraisal scheduled
If the offer is accepted by the seller, a home inspection and an appraisal should be scheduled to have a better understanding of the condition of the home and the worth of the home.
The home inspection will give you a better idea of problems in the structure of the home and, and the appraisal will assist the mortgage lender in determining whether the home you are buying is priced correctly. It is possible that further negotiations may occur through these two processes.
Close on your home
After inspections are done, you can now continue to the closing, which includes title insurance and homeowner’s insurance. Closing date occurs when you sign a large package of paperwork and pay the closing cost. Once this is done, congratulations, the home is now yours!