The Basics of Buying your First Home
When you are ready to buy your first home, there are a few things to
keep in mind to make sure you do not overlook anything and be certain
the process is as smooth as possible.
Before you even attempt to begin looking at houses, the first thing that
needs to be done is
get a copy of your latest credit report. Many people make the
mistake of assuming they know what is on their credit report, when in
reality they do not. Review your credit report carefully and take the time to
correct any errors that may be possible and improving any
negatives that may be present. Your credit report can be an important
component of receiving a mortgage loan and will dictate whether you are
approved or not as well as the interest rate you receive so this is
certainly an important step to take.
After reviewing your credit report, speak to a loan officer about
obtaining a loan. Go ahead and complete the process to be pre-qualified
for a mortgage loan
(
Get multiple free quotes for your home purchase mortgage loan now).
This will give you an idea of exactly how much you
can afford to spend on the purchase of a new home and will also give you
more negotiating power when you do find a home that interests you.
The next step is to locate a realtor (Read
what to look for in a real estate agent?). While there may be many homes that
are on the market for sale by owner today, as a first time home buyer
you will find that it is much easier to make your way through the
intricacies of purchasing a home if you have an experienced realtor by
your side. Realtors can be particularly helpful in letting you know what
is available on the market. In most instances, the seller will pay the
realtor's commission fee so it will cost you nothing to have the
assistance of a realtor.
Give some careful thought and consideration to the features that you
would like to have in your future home. For example, think about the
part of town where you would like to live, the style of house you would
like, how many bedrooms you need and any other features that are
important to you. Of course, you should also consider how much the bank
is willing to loan you. Taking all of this into consideration will allow
you to compile a list of possible homes that will match your criteria
with the help of a realtor.
Once you have a list in hand, you can then begin viewing the homes that
are for sale. Take your time examining each home and ask questions along
the way. After you have selected a house, request a seller's disclosure.
The disclosure will list any problems that the seller is aware of with
the home. If you are still interested in the home after reviewing the
disclosure, you will then need to think about how much you are willing
to offer on the home.
Next, make an offer on the home. If the seller accepts your offer, you
will sign a purchase contract, agreeing to the negotiated price and
terms. Now, you will schedule and inspect of the home to find out about
any problems the seller may not have been aware of. If there are major
problems you may be able to re-negotiate a lower price for the home or
walk away from the deal if the contract was continent upon the
inspection.
The next step will be to have the house appraised in order to ensure
that it is really worth what you are offering to pay for it. If the
appraisal comes in below the purchase price, you will usually be able to
walk away from the deal if the seller will not lower the price to the
appraisal amount.
You will then need to obtain homeowners insurance. Most banks require
that you make arrangements for homeowner's insurance so that the home
will be covered on the day that you close on the home. On the day of the
closing, the bank will transfer funds for the purchase and you will meet
at an attorney's office or at a title company to sign the official
paperwork to transfer the home to you. You should be prepared to pay for
closing costs and the amount of the down payment on the day of closing.
Depending on your loan agreement, you should plan to pay anywhere
between 0 and 20% of the purchase price for the down payment and 2-5%
for closing costs.
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