Buying a home for the first time is one of the most exciting experiences in a person’s life. It’s a life changing decision and it requires a lot of organization and planning. Sometimes it can be difficult to figure out where to start. That’s where we come in. Here is our guide for first-time home buyers. We want to make sure you don’t feel overwhelmed, so you can enjoy the process.
For many first-time home buyers, being able to own a place of their own is a rite of passage. You may have to deal with things like applying for a mortgage, interest rates, a mortgage payment and other monthly payments. Knowing what to expect can not only help you get everything in order, it can also help you avoid potential roadblocks and setbacks. Our tips for first-time home buyers will help put you on the right track. It’s easier when you have a team like Royal Shell Real Estate behind you.
If you have any additional questions after reading our guide, don’t hesitate to give us a call. Our real estate agents are happy to help explain the first-time homebuying process, help you find a home, or assist you with buying your first home.
Let’s Get Started
One thing that can make or break the first-time homebuying process is your real estate agent. It’s vital to team up with someone you trust. This person should know the area well, have the right connections to real estate lawyers, lenders, etc., and, most importantly, should make you feel comfortable working with them. Our Royal Shell real estate agents are passionate about helping customers find their dream homes, they know the area well, and believe in an easy, stress-free first-time homebuying experience. When you’re ready to start looking, we’re a quick phone call away.
Consider your Wants, Needs and Must-Haves
Before you get serious about purchasing your first home, consider what your must-haves and needs are. Think about your family, finances, lifestyle and future goals. Do you need a big backyard? Do you want new appliances? Do you want to live on a quiet street? How important is your location?
One of our main tips for first-time homebuyers is to consider what your life will be like five, 10 and 20 years from now. Do you plan on expanding your family? Maybe you need more bedrooms now. Do you want to get a dog in the future? If you do, he or she will enjoy a big backyard. Do you want to entertain and have friends and family visiting frequently?
Take advantage of open houses, too. It can become tiresome to dedicate a big chunk of time to them, but they are worth the effort. They’ll help you get a better idea of what you like, and you can feel comfortable asking questions you wouldn’t ask if the homeowner were there.
Research your surroundings
Read about the neighborhood’s surrounding schools and the school district of the home you’re considering. It’s also a good idea to look into crime and safety statistics. See how far the necessities are from your home, too. Think grocery store, gas station, bank, hospital, park, beaches, and other places you like to frequent.
It’s a good idea to drive through the neighborhood at different times of the week and various times of day to see what it’s really like.
One Word: Finances
First things first: Set a budget and decide what price range you can comfortably afford. Get pre-qualified for a loan before you begin looking for homes. The last thing you want to do is find the perfect house, only to realize you can’t afford it. Or you buy a home for a lesser value, but end up qualifying for more. Once you are pre-qualified, you can move onto the second step: pre-approval. This involves the lender taking a closer look at your financial history and situation so they can more accurately determine how much you can afford. After you’re pre-approved, you’ll get a conditional commitment in writing for your loan amount.
If you know you’re going to be in the market for a new home—especially if it’s your first home—it’s best to get your finances in order sooner rather than later. This means saving for an emergency fund, pulling up your credit report, checking your credit score, and determining how much you can afford for a down payment. Normally, it’s a good rule of thumb to put down 20% of the property’s purchase price . You’ll also need to consider closing costs. These can include title and settlement fees, homeowners insurance, taxes, fees charged by the lender and homeowners association fees.
What is your debt-to-income ratio? Lenders take this very seriously. They’ll want to see that your total debt is no more than 40% of your income.
Your credit score is the main thing lenders look at when determining who qualifies for a loan. Knowing your own score and where you stand is half the battle. You need to know if you have any derogatory accounts or anything else you might need to resolve. Don’t apply for new credit cards or loans while you’re trying to get a loan for your new home. During this time, you’ll want to be extra careful with your money. And of course, knowing how much you can afford will determine what homes you look at and what features you consider.
Before you visit a lender, make sure you have all of your documents in order. This includes recent pay stubs, your latest W-2 tax forms and two months of bank statements. An experienced loan officer can help you decide on an amount that works for you and your family. He or she can assist in guiding you through the pre-approval process.
What is a loan pre-approval? It helps you understand how much money you are qualified to borrow. Many people choose to shop around for multiple pre-approvals and mortgage rates. You’ll want to make sure you’re getting the best possible deal. However, a pre-approval is not a loan. It only helps you get a better idea of how much you may be able to borrow. Some homebuyers also decide not to visit many lenders as they don’t want to keep running their credit and risk lowering their score. Decide which option is best for you and your situation. If you have any questions, you can always give us a call. If we can’t help, we’ll point you to someone we trust who can.
Other Costs to Think About
Consider the cost of homeowners insurance. It protects you from losses associated with things like burglary, fires and storms. And if you’re not a cash buyer, your lender will require it.
While you’re making your budget and determining where you want to live, decide if you want to live in a community with homeowners association fees. If so, be sure to add them to your budget. They generally include monthly or quarterly dues and an investment fee. Some may also have assessments for repairs to common areas, either now or in the future.
After you purchase your home, you’ll want to keep it maintained. Put aside extra cash for repairs and maintenance. Depending on the state of the home, costs could be ongoing or unexpected. Either way, it’s best to have a safety fund.
Don’t Skip the Home Inspection
This is one of our most important tips for first-time home buyers. The home inspector may find issues you wouldn’t know to look for, like a cracked foundation. They may also potentially help you save thousands of dollars in repairs. Keep in mind that some inspections don’t look for specific problems like mold, pests, radon or problems with the roof. Be sure you know what the test entails before giving it the green light. Also, make sure the inspector looks at the home in its entirety and don’t be afraid to ask questions.
Royal Shell Real Estate Can Help You Find Your First Home
We want to make sure you have a positive first-time homebuying experience. We hope these tips for first-time homebuyers have helped. If you have any additional questions, don’t hesitate to give us a call. We’re here for you every step of the way.