Buying your first home can be an exciting venture, but also overwhelming. Where do you start? Whom do you trust who has your best interests at heart? How large of a mortgage payment can you truly afford?
The benefits of home ownership often outweigh the risks. There are both financial and personal rewards to owning a home. It can make you feel good knowing that you have a place to call your own, and you are making a financial investment that can grow over the lifetime of your ownership.
Find a lender
One of your first steps will be to find a mortgage lender, who will determine the size of the loan you qualify for. Generally, lending institutions base their mortgage loans on the monthly payments you can afford, and your payments shouldn’t be more than 28 percent of your net income. In addition, your other debts, including car and student loans, shouldn’t be over 36 percent of your net income.
The lender will verify your income, assets, credit history and debts, then determine whether you are approved for a loan or not. You’ll receive a letter that lists the mortgage you’ve been pre-approved for, along with a time limit. This document will help you demonstrate that you are a serious buyer.
Start house shopping
This is the fun part. Start searching for homes for sale located in the neighborhoods where you may want to live. You may be able to find your real estate agent this way, since it can be helpful to hire a real estate agent who is working in the neighborhoods or community where you want to buy your home.
Make an offer
Do some research to find out the prices that homes have recently sold for in your area. You may be able to check your local newspaper, local government records or Zillow. If you want to make an offer that is far below what the owners are asking for, back up your offer with the research you’ve found. Don’t let your real estate agent pressure you into settling on any amount that you’re not comfortable to pay.
Reach a settlement
Once you make an officer, the home seller could decide to accept your offer, give you a counteroffer or decline to accept your offer. If you reach a settlement, then you’ll be asked to sign a contract and put down some earnest money. Your contract should specify that you’ll be able to get this money back if you make the decision to withdraw the offer.
Pay for a house inspection
Your real estate agent may have a name of a certified home inspector to hire to find out what kind of shape the house is in. The inspector will look at the structure, determine if there is any damage, and advise you on what types of repairs or changes are needed before you buy the home. If there is any damage, you can attempt to renegotiate the house price based on the home inspection.
Finalize the deal
Once you’ve had the home inspection, you’ll need to contact your mortgage lender and set up a closing date.
Before you know it, you’ll be handed the keys to your new home, and it will be time to celebrate.
