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The 8 Steps to Buying Your First Home

You’ve decided that it’s time to move out of your last rented home and into the first one you own.  That’s a big step!  Before you get your heart set on it, you have to get your head in the game. You need to make sure you know what you can afford to avoid the pitfalls of disappointment before you even begin to look online at homes.

Here are the big steps first-time home-buyers make during this huge milestone.

1. Determine what you can afford – Make sure your credit and savings are in line to afford a home that you want.  Working with an expert lender is how you’ll determine what you can afford for the down payment and what you’ll be able to afford on a monthly basis.  There are many products available for first-time homebuyers, some of which require 20% down and some programs which accept as low as 3% down.  Remember, the more you put down, the less your monthly payment will be.

2. Get-Preapproved Based on the numbers and research you just did, get pre-approved by your lender so that not only you know what you can afford, the seller will as well if you decide to make an offer.  This is how sellers and their agents know you’re a serious buyer, and it gives your offer validity because it’s backed by legitimate documentation. Don’t rush into it! If you get pre-approved and it takes you a few months to find a spot you love, have your lender update the preapproval so it’s as current as possible.  It helps in the offer process.

3. Select an expert, local Realtor – Buyers agents are there to ensure you and your assets are protected during the entire process. Reputable agents with strong professional networks of other agents know which houses are available before they’re even listed!  Don’t start looking until you have your team lined up and ready to go to bat for you.  Realtors are paid through the proceeds of the sale and typically from the predetermined commission that the seller is offering.

4. Figure Out What You Want – Make a list and check it twice. Categorize by Wants, Needs, and Do Not Wants.  Understand that what you can afford, where you are looking, and what the area’s homes typically offer will determine how realistic you’re being.  You’re likely not going to find a brick townhouse with spiral staircases in a suburban town.  On the other hand, finding an affordable 4 bedroom with a finished basement and an open concept floor plan may be tough in the city.  Being realistic is key in this whole process.  You do get what you pay for, so if you want that big family home close to the city, but have a strict budget, you make have to purchase one that has good bones and will allow you to spruce it up over time as budget allows.  Keep your mind open and your budget in the forefront.

5. Enjoy the hunt – Sometimes buyers know right off the bat which home they want to make an offer on.  For others, it takes time.  Keep reviewing properties as they appear in your online searches, keep communicating with your Realtor, and keep the faith.  The right house will come.  When it does, and you’re fortunate to have an accepted offer, it’s time to apply for the actual loan.

6. Stay Consistent with Your Finances – In the loan application process, it’s important that nothing substantial changes in your financial profile. Don’t change jobs, don’t go buy a car, don’t plan and pay for a European vacation.  Keep a low profile.  Lending institutions need to know that you’re a reliable candidate and that you’re conscientious with your finances.

7. The Waiting Game – In the meantime, a number of other events in the buying process will occur. There will be an inspection depending on the offer agreement, possibly a radon test, you’ll need to find a real estate attorney to represent you for the Purchase and Sales Agreement, and the appraisal will be assessed by the lender.

8. Closing Time – The buying process comes to a Close. The mortgage commitment becomes a final approval when the Clear to Close notice is provided by the lender.  Get your signature ready, because there are lots to places to sign at the Closing.  At the end of it, you’ll walk away with the keys to your new home!

Congratulations if you’re ready to jump into this process!  Your local EXPERT Realtor will know exactly what to do and how to get you the house you want.  Contact us today if you’re ready!

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