Ideally you could take your time house shopping in a perfect market, with perfect homes, at perfect prices, and a perfect knowledge, with a limitless inventory. Unfortunately, this is rarely, if ever the circumstances homebuyers find themselves in. We’ve put together a short, but sweet, guide to buying a home for first time buyers.
Step 1: Figure out your finances
Checking your credit report and score will help you get an idea of what you qualify for. You can also figure out your debt to income ratio. Add all of your monthly debts (student loans, car payments, credit cards, etc.), the total of these debts ideally will be 40% or less than your monthly income. If they are greater than 40% don’t get discouraged, there are still options!
Step 2: Find a Realtor
Finding a good Realtor can significantly improve your home buying experience. A Realtor will be your greatest resource and advocate throughout the process. Buying a home is one of the biggest decisions you’ll ever make, why would you not use an expert? Go ahead and call a few different Realtors, ask questions, look up reviews. It’s important to find someone you trust.
Step 3: Find a Lender
After finding a good Realtor, they can recommend a good Lender. The Lender will determine what you qualify for, and help you get preapproved. They’ll inform you of any available programs and grants for first time homebuyers. They might be able to help you consolidate or pay off loans to improve your debt to income ratio. You’ll need to provide them with credit history, employment history, and income.
Step 4: Start Looking at Homes
Now that you have a price to go off of you can start the house hunting! Your Realtor can help you refine your search and help you find what’s available. Realtors have access to the Multiple Listing Service, a tool that will make the process much more efficient.
Step 5: Make an Offer
Your realtor will help you write up a competitive offer that is appropriate for the current market. This could be above or below asking price. It could also include other contingencies depending on circumstances. Whether the response is a yes, no, or a counter offer your Realtor will help you figure out the next step.
Step 6: Inspections, Insurance, and Financing
If your offer is accepted you have some things to do before the closing day. You may need to finish financing. We recommend setting up a home inspection. You will also need to talk to your lender about Home Owners Insurance and locking in an interest rate.
Step 7: Closing!
Closing Day is filled with paperwork and signatures, but at the end of it you’re a homeowner! It typically takes place at a Title Company and takes care of all the legal aspects. You’ll determine the date of your first payment, and the best payment options. Depending on contractual agreements, you’ll be moving into your new home in no time!