Advice for a First Time Home Buyer
Buying a house for the first time is exciting – and a bit unnerving for many people. There is a lot that goes into the home buying process. What you do not know can cost you money, time, and stress. That is why it is of the utmost importance to work with an experienced realtor when you are a first time home buyer.
There is more to buying a house than walking through the front door, falling in love, and placing a bid. If it were that simple, there would be no need for realtors. The last thing you want to do is to overpay for a house, get stuck with costly repairs after moving in, or find out the school district is terrible. These are areas where the expertise of a realtor is priceless.
In this blog, we provide the first time home buyer with advice necessary to simplify the process. Of course, we will be with you every step of the way. However, we know many people like to have crucial information at their fingertips. That is why we put together this guide of what to know when buying a house for the first time.
Steps to Buying a House for the First Time
The situation for a first time home buyer is often different than for people who have been in homes before. Many times, we are talking about people who are younger, maybe newly married, early on in their careers. At this stage of life, many people have never spoken with a financial planner. The benefit of completing this step before proceeding with our list of steps to buying a house below is that the advisor can help you look at long-term goals and determine what changes you might have in your income down the road. You may be better off spending a bit more on a home now than having to sell and move in a few years if you outgrow your new house. It is not always necessary to have a “starter home” if you seek the advice of professional advisors.
Aside from that, here is our list of steps for buying a house:
Step 1: Begin Your Research – Early
Do not wait until you are ready to buy and move to begin researching the areas you like, prices, the neighborhoods, schools, accessibility, shops, etc. If you do not know how to begin, a professional realtor already has all this information available. In fact, finding the right realtor who knows your area is a vital part of this first step.
Step 2: Know Your Budget
This is where talking with a financial advisor can help you plan what you can afford. Before you contact a mortgage broker for pre-approval, it is best to know where you stand financially. Lenders prefer when you keep the home cost between three and five times your total annual household income if you have moderate debt and are making a 20 percent down payment. More or less debt and changes in how much money you are putting down can impact that number.
Step 3: Getting Prequalified and Preapproved
If you are a first time home buyer, you may not know the difference between getting prequalified and preapproved. Getting prequalified requires providing some basic information about income, investments, and savings to a mortgage company to find out how much they may consider lending you. This number tells you the amount of a home you are qualified to buy. That does not, however, mean they WILL give you a mortgage. For that, you need to get preapproved. Preapproval requires providing additional documents such as bank statements, W-2 statements, investment statements, and paycheck stubs. The mortgage company will check your credit and review any outstanding debt. Sellers like when potential home buyers are preapproved because it reduces the risk of the sale falling through.
Step 4: Go House Hunting
This is the fun part. Your realtor will discuss your needs, desires, and requests, and put together a selection of houses for you to visit. As a first time home buyer, you might fall in love with the first house you see. Do not jump head-first into an offer. It is imperative that you look at a few homes to really get a feel of what you want. There is much more to selecting a house than a quick look. Check out our blog “Top 10 Home Buying Tips” for more information. Here are some things to consider:
The size of the rooms – will they be too small for your furniture, are they good for entertaining
How the outside of the home looks – will you have to repaint, invest in landscaping, or get a new roof
Interior look – do the walls need new paint, do you need to redo flooring or remodel the kitchen or bathrooms
Check the plumbing and electrical systems – turn on all faucets, flush all toilets, turn on all electrical switches to ensure that everything works
Check the windows and doors – open and close all windows and door to make sure they work
Pay attention to traffic – is the home on a busy street (something to consider if planning on having children)
Parking – where will visitors to your home park
Lighting – is there abundant street lighting (safety feature)
Surrounding homes – how are the other homes maintained (that tells you a lot about your neighbors)
Step 5: Make an Offer
Your realtor will take care of presenting the offer to the buyers. Once an offer is accepted, the house goes into escrow (where your deposit is held).
Step 6: Home Inspection and Appraisal
This is a critical step as you want to get a good inspection to ensure that your new home is in good shape. The inspector’s report will list any potential issues that you and the seller will negotiate into the sale of the home. Do not worry – your realtor will handle much of this for you. You should be present during the inspection to ask the home inspector any questions you have.
The appraisal is necessary for the lender to determine the value of the house. If the appraisal is lower than the selling price, it may be necessary for the seller to lower the asking price or for you, the buyer, to put down more money.
Step 7: Select Your Mortgage Program
Lenders have a variety of programs available to home buyers. You will work with your mortgage broker to select the one best suited to your needs. Fixed rate loans keep your monthly payment the same for the term of your loan. Adjustable rate loans typically start out lower for a few years before increasing.
Step 8: Paperwork, Paperwork, and More Paperwork
Luckily, you are not involved in much of this step. Your realtor will work with a title company who handles coordinating all the paperwork with the lender. An important step in this is making sure that the title is clear and that there are no liens on the property.
Step 9: Sign on the Dotted Line
The closing of the house is an exciting time for a first time home buyer. You will be signing many documents, and then, you will get the keys to your new home.
At Great Florida Homes, we are here by your side every step of the way. We are your Coral Springs and Parkland home experts. Contact us at (954) 695-SOLD for help buying your new home.
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