8 STEPS TO TAKE BEFORE
PURCHASING YOUR FIRST HOME
For many people, it is a lifetime goal to one day become a homeowner. The new year has begun, and perhaps you’ve decided that 2024 is the year to take the leap and make your home-buying dreams come true. In this guide, you’ll learn 8 essential steps you should take before purchasing your first home. Whether it’s your first time in the real estate market or you’re well-versed in the industry, these are the first steps you should know!
Step 1: Start saving for a down payment
One of the most crucial steps to buying a house for the first time is understanding what you can actually afford and saving for the down payment. Unless you’re paying with cash, buying a new home will likely require taking out a mortgage – when a lender loans you the money, and you pay it back over time. To obtain a mortgage, you’ll need a down payment to prove you are responsible and will pay it back. Ideally, a down payment on a mortgage should be 20% of the home’s price. Alternatively, you could explore other mortgage options that don’t necessarily require a 20% down payment, such as a mortgage buydown, or an assumable mortgage.
Step 2: Check your credit score
In addition to a down payment, a first-time home buyer must have a decent credit score. Did you forget to pay off a couple of credit cards? Unfortunately, this amongst many other factors will affect your credit score. A lender will check your score and credit report to estimate the odds that you will also deliver your monthly payment. The lender will use this information not only to determine how much money they should loan you but also whether or not to loan you money at all. It is also important to nail down what kind of mortgage you’re looking to take out as well.
Step 3: Get pre-approved for a mortgage
Another important first-time home buyer step is seeking pre-approval from a lender for a home loan. This is when you will meet a loan officer from various mortgage companies. Each mortgage lender will scrutinize your financial background and use this info to determine whether to loan you money and what size monthly payment you can afford.
Step 4: Find a real estate agent
Now that you’re officially pre-approved, it’s time to hire your real estate team, starting with a trusted REALTOR®. Specifically, a buyer’s agent will help you find suitable houses, negotiate the best deal, and guide you through all the nuances of home buying along the way.
Step 5: Go shop for a home and make an offer
Now for the fun part! As a home buyer, you can peruse thousands of real estate listings and then ask your agent to set up appointments to see your favorites. No matter how many homes you see, be sure to consider your wants and needs, and avoid these house-hunting mistakes along the way! This process can certainly be overwhelming, so it’s best to get organized and list your must-haves from those features you’d like but don’t need. Once you’ve found your dream home, you will work closely with your buyer’s agent to make an offer to the seller.
Step 6: Get a home inspection
Once you find a home, a home inspection is a crucial step to ensure there are no pressing issues that aren’t noticeable to the naked eye. You will hire a home inspector to investigate the house from top to bottom to determine if any problems might make you think twice about moving forward. This can be anything from termites, a faulty foundation, mold, asbestos, or more.
Step 7: Get a home appraisal
Even though you were pre-approved for the home loan, the lender will want to conduct a throughout home appraisal to ensure it is a good investment. The lender will look around your home, similar to the home inspection, to determine if any problems might make them think twice about lending.
Step 8: Head to closing
Lastly, the closing, which can also be known as settlement or escrow, brings together a variety of parties who are part of the transaction. This includes the buyer, seller, mortgage representative, real estate agent, and more. Closing is the day you officially get the keys to your new home and when all the stress and worry finally pays off. Once the deed is finally yours, congratulations! You are officially a homeowner, and you can officially begin your new life chapter!