Buying your first home might be an exciting experience, but it can also be an overwhelming process. From applying for a mortgage to making an offer on a home, the whole process can be confusing. Here are the 7 steps you need to take when buying your first home to make this big step a bit less stressful.
7 Steps to Buying Your First Home
1. Find Your Budget
The first step to buying a home is figuring out your budget and how much home you can afford. You start by figuring out your monthly household income, as well as adding up any monthly expenses you may have. You’ll also have to calculate the down payment for a house, the monthly mortgage payment, and any other associated costs. As a general rule, experts recommend spending no more than 28% of your gross monthly income on housing costs. You might need to cut back on your hobbies and habits to make some homes work for your budget.
2. Save for Up-front Costs
Buying a house starts with a down payment, so you need to make sure you have the money for that. For a first-time homebuyer, the minimum downpayment required to buy a house is generally 3 percent. This number increases to 3.5 percent for an FHA loan. You’ll also have to pay closing costs to the real estate agent, so make sure you consider that, too.
Note that where you plan to move will have a major influence on how much you need to save. For example, the average down payment in San Francisco is $171,449, much higher than the national average.
3. Get a Loan
The next step is getting preapproved for a loan. For most people, this means going to your bank and applying for a mortgage. However, VA loans in Florida can be a great way to get a lower rate with no down payment. Keep in mind that these loans are only available to eligible veterans and active duty service members, as well as their families. If you’re eligible, this is a great way to save when buying a home. Look into what types of loans may be available to you—whether that be VA loans or first-time buyer loans.
4. Find a Real Estate Agent
Your real estate agent will help you every step of the way, from finding homes that fit your needs and budget, to making an offer and closing on a home. This is why it’s so important to do your research and find a good real estate agent. A real estate agent will help you find a home that’s in good shape with enough bedrooms and bathrooms for the family.
5. Offers, Inspections and Appraisals
Once you’ve got a real estate agent taking you to look at homes, you can consider making an offer. After you’ve made an offer, however, the home you’re buying will need to be inspected and appraised. During this process, the inspector may find problems with the house that need to be fixed before the sale. The better the inspection, the less you have to worry about fixing up your home when you move in.
6. Credits and Repairs
When a problem is discovered during an inspection, your real estate agent will talk with the homeowner about making repairs or reducing the price of the house. This is another reason why having a good real estate agent is so important. The seller may even offer credits you can use to repair your home. That way, all you have to worry about is furnishing your home.
7. Do a Final Walkthrough
Once you’ve made an offer and the inspection and appraisal have gone well, you can do a final walk through before buying your home. This final walkthrough gives you a chance to make sure the home you’re buying is in good condition and no small details have been missed. A thorough final walkthrough helps prevent any surprises on moving day, so make sure you take your time.
Owning a home is exciting, but buying your first home can be a lot to deal with. Breaking the process down into steps helps simplify buying a home.