Buying your first house can be an exciting and overwhelming process. Most people imagine that the process will look like something out of an episode of “House Hunters”. But there is actually a lot that needs to happen before you even set foot into your first showing.
Purchasing a home is a big financial investment. And depending upon the research and effort you put into it, this process can be a blessing or a thorn in your side. Here are seven things you need to know before buying your first home:
Even if you have saved up the cash for the down payment, your credit score will have a big impact on whether you qualify for your mortgage. Errors do happen on credit reports so if there are mistakes you will want to get those fixed before you try to get pre-qualified.
Lenders will check all financial history to ensure that you don’t exceed your debt to income ratio. And if you want to get a good interest rate, you will need to have a credit score of at least 700. The point is to have a solid understanding of what your financial situation is before you start looking at houses.
Buying your first home may require a large upfront cash investment. You will need to cover the down payment and closing costs.
Conventional wisdom talks about 20% down payment, which in most cases it can be an uphill battle. But don’t despair! Connect with a knowledgable mortgage expert to explore options. There are a variety of programs that will help you get into a home with as little as 2.5% down payment.
You also need to think about your monthly expenses going forward. You should plan on a monthly mortgage payment, homeowner’s insurance, utilities, and monthly maintenance fees.
When you get pre-qualified to buy a house, the lender has agreed to lend you a certain amount of money at certain conditions. By getting pre-qualified before you start looking for houses, buyers will take you more seriously. This puts you in a better position to put down an offer when you do find the right home.
This can be tricky because no one knows everything they want in a home until they have owned one. The best way to start is by sitting down and making a wish list of everything you are looking for.
Then after you have toured several homes you can sit down and reassess your priorities. There may be things that you want to add to that list. And there may be certain things you will have to compromise due to your budget.
And when you buy a home you aren’t just buying the property itself, you are also taking on new neighbors. Take some time to think about what kind of neighborhood you want to live in.
The real estate agent you work with will have a big impact on this process so it is important to find the right person from the start. Your real estate agent can provide you with information on homes that you might not have access to on your own. They have the knowledge, negotiation skills, and information that will be invaluable to you during this process.
Even if you have found the house of your dreams, you should always opt for a home inspection. There could be structural damage or other things that need to be fixed. Then you can either renegotiate or withdraw your offer if the inspection shows there are significant problems with the house.
The seller may agree to fix any existing problems prior to closing day. In that situation, you should do a final walk through of the house to confirm that the problems have been resolved.
There is a lot of paperwork involved in buying a home. Fortunately, your lender will have a title company arrange all the necessary paperwork so that everything is in order for closing day.
When you finally close on your house, you will sign all of the loan documents and paperwork to complete the purchase. Once the check has been delivered to the seller the house is all yours!
If you’re ready to see how SnapFi can help you buy your first home get in touch with us today.
Image courtesy of Eréndira Tovar