Buying a home can be an exciting yet nerve-wracking experience, especially if it’s your first time. So before you start searching for your dream home, there are a few essential steps to take. We’ve put together the top ten items for your first-time home buyer checklist as you begin the home buying process.
1. Make a Budget Plan
Before you start scrolling through Zillow or local real estate websites looking for your dream home, grab your bank statements and sit down to assess your finances. You will need to gather the necessary documents before meeting with a mortgage loan officer. The three most important factors that mortgage loan officers evaluateare credit scores, income, and debt-to-income ratio. This is why budgeting is one of the crucial steps to complete before falling in love with a home that may beoutside your budget.
2. Evaluate Mortgage Loan Options
The next item in the first time buyers’ checklist is to find a lender. A lender will analyzethe financial documents you gathered, your credit score, debt, and the income for both you and your spouse (if applicable). You can find a lender throughyour local bank using a broker or an online lender. The benefit ingetting pre-approved for a loan is that you can put in an offer and get under contract much more quickly. Make sure to ask your lender about any first-time home buyer programs.
3. Create A Wants vs. Needs List
Whether you’re looking for a house for the whole family, you and your spouse, or just yourself, your needs and wants will vary. The kids might want a pool, but does it fit your budget? So, sit down and identify your top five needs for a house. Is it the number of bedrooms and bathrooms, easy access to school, or perhaps a big backyard? Making a “wants vs. needs” list will make the search for your dream home go much more smoothly.
4. Decide on a Location
Similar to your wants vs. needs list, the next item in our first time home buyers checklist may require a more hands-on approach. Before hiring a real estate agent, narrow down the main qualities you and your family are looking for in a neighborhood. Do you want to live in the heart of the city or take advantage of the space in the suburbs? This may require walking or driving through various neighborhoods to get a feel for the community. For example, a planned community like Lakeside offers plenty of nearby recreational opportunities, great schools, and is just a short drive from downtown Austin.
5. Find A Realtor
A real estate agent is a beneficial resource when navigating the home buying process. Your real estate agent will ensure that you get the best deal and help guide you through the paperwork process. In addition, you will most likely spend quite a bit of time with them during the process, so find one that you feel comfortable with.
6. Put In An Offer
Putting in an offer on a house is an exciting step in the home buying process! Fortunately, your real estate agent will be by your side to help negotiate the price and additional details. The seller can either accept, counter, or deny your offer. In a competitive market, be prepared because houses sell quickly, and the seller has the final decision.
7. Hire An Inspector
An inspector will give you an in-depth assessment of the home you are interested in purchasing. It is one of the most crucial steps in home buying. Perhaps the house looks good from the outside, but the inspector may find severe plumbing or foundational issues upon closer examination. This is particularly important if you are buying an older house. The potential for problems increases with the age of the home. Knowing what you’re getting into before buying a house is important.
8. Final Home Buying Steps
After making an offer and having an inspection, it’s time for the final home buying steps. Your real estate agent will advise you on the final paperwork needed and the final steps.
Before finalizing paperwork, it is crucial to do a final walk-through with the owner or real estate agent if possible. Not only will this help to familiarize yourself with the house and ask additional questions, but it will also ensure that all parties are happy with the terms and agreement of the sale.
9. Save for Closing Costs
Unfortunately, the sale price of a house is not the total cost that you, the home buyer, will have to pay. The lender will send you a closing disclosure as you wrap up the final purchasing steps. This is the final amount with fees like application, appraisal, attorney, closing, courier, origination, and credit reporting fees. It may sound like a lot, but closing costs tend to range between 3 to 6 % of the home price.
10. Looking Ahead: Home Ownership Tips
Owning a home is a big responsibility. The budgeting doesn’t end when you’re handed your new house keys. Take some time to settle in and celebrate the new home, but then make a plan to sit down with the spreadsheets and financial documents onceagain. Upkeep, maintenance, and unforeseen issues will occur, so it’s best to have some money set aside in preparation.