When you’re buying your first home, you might feel like you’re in over your head at times. To keep things simple, we’ve put together a to-do list for all first-time homebuyers. Make sure you’re on the right track to homeownership. If you still feel a little lost, give us a call! We’d be happy to help you find your way.
You might be thinking, “Save money to buy a house? Isn’t that what a mortgage is for?” Well, yes, but there are other costs involved in buying a home that might not be covered in your loan. Depending on the type of loan you get, you might have to save for a down payment. There will also be closing costs, which you’ll be required to pay via check or wire transfer at closing. You’ll also need some in escrow for insurance and taxes.
Give your credit score a boost.
Even if you have a great credit score, it never hurts to try and improve it a little. After all, the higher your credit score, the lower your interest rate will be. This doesn’t mean you should rush to pay off and close any and all credit accounts. This could actually have the opposite effect. You need evidence of credit to have good credit, after all. Keep current on bills, and don’t make any major purchases until after you close on a new home.
Figure out what you can afford.
You might have a good idea of what amount you’re willing to spend on a home, but it’s always a good idea to consult a lender before you come up with a budget. There are a few things you might not think about that will add dollars here and there onto a monthly payment. The lender will help you come up with a figure you’ll be comfortable paying each month, which will tell them the total sale price to aim for.
While you’re consulting that lender, go ahead and get started on the preapproval process. Preapproval is a great thing to have on your side when you begin to shop for a new home and make offers. Make sure to shop for the best deal. Not all lenders are created equal. One might be able to offer a lower interest rate, while another could have a better loan option for you.
Make a wish list.
Actually, make two lists—one labeled Must Have and the other labeled Nice To Have. The must-have list should include things you absolutely have to have. For instance, you know the minimum number of bedrooms and bathrooms you need. You know if you have to have an office space. You know if whether you want a one-story or two-story home. Your nice-to-haves are the things you could live without or add later. This list will usually include items like stainless steel appliances, a walk-in shower, a certain color of cabinets or countertops, and a pool. Be as flexible as possible. This will make your househunt go much more smoothly.
Consult a real estate agent.
This step could actually happen at any point in your buying timeline. A good agent can help you with any of the things in this list, or at least recommend another individual who can. The earlier you contact a real estate agent, the more help you’ll have every step of the way.
Shop for your new home.
This is the fun part! With your agent’s help, make a list of home you’d like to see. He or she will make appointments for showings working around your schedule. As you begin to shop for a home, you might find that you need to add or remove things from your wish list. Don’t forget to think about resale value as you shop. It might sound silly to think about selling a house you haven’t even bought yet, but this is a major investment. You have to protect your interests later on down the road.
Make an offer.
When you find the perfect home for you, it’s time to make an offer! Sit down with your agent to decide how much you should offer for the home and what contingencies to include. Be sure to protect yourself as much as possible. Add contingencies for things like financing, home inspection, and appraisal.
Have a home inspection done.
Once your offer is accepted, lots will be happening behind the scenes with financing and documentation. The first thing you should do is schedule a home inspection and go over the report. Decide what, if anything, you’d like to ask the seller to fix. This might take a bit of negotiation. Deals do fall through from time to time if both parties can’t come to an agreement.
Obtain homeowner’s insurance.
This is another small but extremely important task that happens between the acceptance and closing. Shop around and get referrals and a few different estimates. Determine whether you have to have flood insurance. Find the best coverage for your home at the best rate and go with it.
Do a final walkthrough.
After issues from the inspection have been fixed and you’re ready for closing, walk through the home one last time to make sure everything is shipshape. Test light switches, faucets, drains, toilets, doors, and windows. Make sure nothing has been removed or broken since the last time you visited the house.
Close and move in!
On closing day, you and your agent will meet at the chosen attorney’s office. You’ll bring a check for the designated amount of closing costs on the settlement statement, which you’ll have received a couple of days prior. The seller may or may not be there, depending on whether they’ve already signed their part of the paperwork. During closing, you’ll sign a lot of documents, funds will be disbursed, and your brand new set of keys will be handed over. Now move into your new home and enjoy!