How to Buy Your First Home
Buying your first home can be an exciting experience. While it does require time and effort, working with the the right Realtor™ can make the process enjoyable, there are steps that every prospective homeowner needs to take in order for things to go smoothly. If you follow these 10 steps you will make the home buying process easier and minimize the stress that can be experienced when things don’t go your way.
Step 1: Do your Homework
As soon as you can, start by identifying areas that you would like to live. Do you like the convenience of city life, do you prefer the suburbs, or would you like the serenity of the a more rural environment. Next, you should identify what type of house you would best suit your needs. Do you want a single family home, a condominium, a townhouse? You should ask yourself (and your family) what the advantages and disadvantages of each would be. Finally, you should ask yourself what do you need in your home. How many bedrooms, bathrooms, size, amenities do you desire. Understand the need to have vs. the nice to have. You will save yourself a lot of time and confusion by coming up with a written list of your needs, wants, and areas.
Step 2: Hire the Right Real Estate Agent
Real estate agents are an invaluable partner when you’re buying or selling a home. While many home buyers search online for homes, many of the most popular websites often have outdated information and, too often, many of the homes are under contract and no longer available. Working with a top performing real estate team will provide you with helpful insight and information on homes and neighborhoods that isn’t easily accessible to the public. Realtors™ have the best technology and use their knowledge of the home buying process, negotiating skills, and familiarity with the area you want to live in to find you the right home. There services are virtually free – they’re paid from the commission paid by the seller of the house. You will want to sit with them, in their office, and go over your criteria.
Step 3: Get Preapproved for Your Mortgage
Once you have hired the right Realtor™ to work with, and before you start looking for a home, you will need to know how much you can actually spend on a home. The best way to do that is to get prequalified for a mortgage. The best way to get prequalified id to provide detailed financial information to a lender, such as your income and the amount of savings and investments you have. They will review this information and based on your credit score, they will tell you how much they can lend you. This will tell you the price range of the homes you should be looking at. In today’s market, where homes are often under contract within days of coming on the market, you should work with a lender who can take your information a step further. This involves providing them with financial documents (2 years of tax returns, W-2 statements, paycheck stubs, bank account statements, etc.) so your lender can verify your financial status and credit and get you pre-approved which puts you in a strong position when making an offer to purchase.
Step 4: Shop for Your Home
When you sit with your Realtor™, they will ask questions to help them understand your criteria such as the style of home, number of bedrooms, bathrooms, desired neighborhood, etc. Once that has been narrowed down your Realtor will find appropriate properties and schedule showings. Start touring neighborhoods where there are homes in your price range. When you preview homes with your agent, take notes. Experienced agents will take you to homes that meet your criteria so sometimes it can be hard to remember everything about them, so you might want to take pictures to help you remember each home.
Make sure to check out the little details of each house. For example:
- Test the plumbing by running the shower to see how strong the water pressure is and how long it takes to get hot water
- Try the electrical system by turning switches on and off
- Open and close the windows and doors to see if they work properly
It’s also important to evaluate the neighborhood and make a note of things such as:
- Are the other homes on the block well maintained?
- How much traffic does the street get?
- Is there enough street parking for your family and visitors?
- Is it conveniently located near places of interest to you: schools, shopping centers, restaurants, parks, and public transportation?
Step 5: Make an Offer
Once you have found the right home, work with your Realtor™ to negotiate a fair offer based on the value of comparable homes in the same neighborhood. Once you and the seller have reached agreement on a price, the house will go into escrow, which is the period of time it takes to complete all of the remaining steps in the home buying process.
Step 6: Get a Home Inspection
Typically, purchase offers are contingent on a home inspection of the property to check for signs of structural damage or things that may need fixing. Your real estate agent usually will help you arrange to have this inspection conducted within a few days of your offer being accepted by the seller. This contingency protects you by giving you a chance to renegotiate your offer or withdraw it without penalty if the inspection reveals significant material damage.
Step 7: Review the Inspection Report and Address any Issues
Both you and the seller will receive a report on the home inspector’s findings. You can then decide if you want to ask the seller to fix anything on the property before closing the sale. Before the sale closes, you will have a walk-through of the house, which gives you the chance to confirm that any agreed-upon repairs have been made and that the home is “broom clean”.
Step 8: Have the Home Appraised
Lenders will arrange for an appraiser to provide an independent estimate of the value of the house you are buying. The appraiser will analyze the value of the property and let all the parties involved know that you are paying a fair price for the home.
Step 9: Coordinate the Paperwork
When buying a house there is a lot of paperwork and research involved in the process. Your Realtor™ will recommend a title company to handle all of the paperwork and make sure that the seller is the rightful owner of the house you are buying and that there are no liens against the property you are buying. Before the closing, you will need to have all deposits in escrow and
Step 10: Close the Sale
At closing, you will sign all of the paperwork required to complete the purchase, including your loan documents. Once the paperwork is signed, and the loan is funded by the lender, you will get the keys to your new home.
Purchasing a home is one of the largest financial investments you will make in your lifetime. As you can see, your Realtor™ plays a valuable role home in the home buying process. They have the right training and experience to make the process as painless as possible. During the process, complications sometimes arise so it is always best to work with a Realtor™ who is going to give you all of the information you need and explain everything in an honest and forthright manner.
Mario Taormina is a Real Estate consultant with Keller Williams Preferred Partners in West Palm Beach, FL. He can be reached on the web at MarioTaormina.com or by voice/text at 561.235.9144. You can also visit him on Facebook at Mario Taormina – Realtor