We won’t sugar coat it, buying your first home is a significant milestone that requires careful planning and informed decision-making. Most people wait until they find their “dream home” on Zillow and find that they don’t qualify and didn’t make the proper preparations to be a contender in the open market. Being well-prepared before diving into the real estate market is crucial and the earlier you start planning the better your chances of success. Let’s dive into our “8 Tips for First-Time Homebuyers.”
- Start with a Budget
Setting your realistic budget is going to be the foundation of your homebuying journey. While starting with a budget is crucial in real estate, it is easier said than done. Calculate not just the mortgage you can comfortably afford each month, but also the maintenance, taxes, and unexpected costs. Your monthly household debt including your potential future mortgage, insurance, and tax should not exceed half of your monthly household income. Knowing your financial boundaries will help you narrow down your options.
- Get Pre-Approved for a Mortgage
Securing pre-approval for a mortgage streamlines the whole real estate process and strengthens your purchasing power. From the perspective of the seller looking at multiple offers, you will always be asked to provide pre-approval documents showing that you can in fact close the deal. Most buyers simply have a note from a mortgage broker stating they are approved for the purchase price, but when we review offers we typically want to see that the offeree has actually been underwritten by a bank. Having an underwritten pre-approval, that is that the bank has reviewed the required documents and approved you for a loan, will set you apart from the competition. Gather the necessary documents and choose a reputable lender to navigate this step efficiently.
- Research the Market and Neighborhoods
Explore different neighborhoods, considering factors like schools, amenities, and transportation. Once you have narrowed down your preferred neighborhoods, talk with local real estate agents that have listings or recent purchases in those areas. Conduct thorough market research to comprehend real estate trends which will aid in informed decisions. Additionally, you may have overlooked a neighborhood that meets your criteria or is just outside of your search. Remain open to suggestions and your agent will have further insights that will help guide you in the process.
- Find a Reliable Real Estate Agent
Partnering with a skilled and trustworthy real estate agent is invaluable. Some agents sell the “hype”, so it is important to take the agent’s character and company culture into account. Look for experience, local knowledge, and solid communication to guide you through the complexities of buying your first home. When considering working with a newer agent, they don’t need to be the most experienced agent in the industry to be successful, if they have the right broker to guide them. Whether an agent is new, or has years of experience, we recommend an additional assessment of their team, broker, and/or company.
- Attend Open Houses and Viewings
Get a feel for various properties and neighborhoods by attending open houses and viewings. Know what to look for and ask relevant questions to gauge the suitability of the home and neighborhood for your needs. The more properties you visit, the easier time you will have assessing your potential future home and understanding what you are really looking for in an ideal living environment.
- Consider Home Inspections
Home inspections are crucial to uncovering potential issues. Find a qualified inspector, or ask your agent for a preferred vendor they have worked with in the past. Take the time to fully understand the inspection report to make an informed decision about the properties condition, or what potential additional costs you may incur later as the future homeowner.
- Negotiate and Make an Offer
Work with your agent to make a competitive offer without overpaying. It is important that you feel comfortable with your offer as it will set the precedence for the buyer-seller relationship and will impact the negotiations for the entire purchasing process. Understand the terms and conditions of the offer, and the expectations of the seller, to ensure a fair deal for both parties. Each deal can have unique intricacies that your agent can help guide you through.
- Preparations to Complete the Closing Process
The Closing Process for your first home involves reviewing and signing documents, obtaining insurance, and a final walkthrough disclosure. Talk with your agent about the closing process early on when you enter escrow. The most efficient action to take when starting an escrow is to get all the necessary disclosures knocked out early on. Knowing what to expect during this phase and having all the disclosure documents already completed streamlines the closing process and ensures a smooth transition of homeownership. Your purchase agreement will explicitly state the exact date and time ownership and occupancy rights are transferred. Once you have the county clerk’s stamp recognizing the close and transfer of ownership, you are officially a first-time homeowner!
Thorough research, financial preparedness, and guidance from professionals are key to first-time buyers. Explore additional resources, blog posts, and websites to further assist in this significant investment. Buying your first home can be daunting, but with these tips and the additional resources found on our website, you’ll embark on this exciting journey well-equipped to make informed decisions and find the perfect place to call home.
