Buying a House for the First Time: A Guide for Home Buyers
The First Steps Toward Buying a Home
Buying a home can be both exciting and stressful, especially for first time home buyers. There will be a ton of new information thrown at you and at times it may be a little overwhelming. Buying a home is a great investment apposed to renting a home and most people will go through this process at least once in their lifetime.
There are many steps in the home buying process from finding a realtor to closing the deal. The following is an overview of what you will need to do and what to expect when you are buying a house.
One of the most important, if not the most important, thing about purchasing a house is the mortgage. Your mortgage payment will be one of the largest payments you make and can easily affect your wallet and way of living. Since most of us cannot purchase a home with cash we must take out a loan to pay for it.
Your mortgage payment will be broken down into a couple of components: principal and interest. The principle part of you mortgage payment is the amount you borrow to buy your home. The interest is based on the percentage that you qualified for on your loan. Your mortgage payment may also include insurance and escrow payments. There are online mortgage calculators like the one shown below that you can use to determine what your mortgage payments would be like per month. Keep in mind that most of these calculators only include your principle and interest portions of the mortgage payment. Play around with prices and see how much you can afford so you can look for homes that fit within your budget.
It is a good idea to get pre-qualified for a home before you start looking. Like any other loan, you will be qualified up to a certain amount based on your credit, your income, work history, and other things. To get pre-qualified for a home you will have to work with a mortgage broker or other lender. This will let you know how much you are qualified to spend on your home as well as what your interest rates will look like with different loans. There are many different home loans out there and it will require some research to determine which one is right for you. Some have lower down payments with higher interest rates etc. Mortgage brokers and lenders can help you determine which loan to pick.
Mortgage Payment Calculator
What Does a Real Estate Agent do for a Buyer?
Basic Duties of a Real Estate Agent:
Finds homes within your needs/price range
Sets up appointments with the buyers/sellers for showings
Researches facts about the home
Researches the time the home has been on the market
Compiles all necessary paperwork
Explains terms in your contract
Helps you decide on how to present your offer
Explains the housing market
Working With a Realtor
Having a realtor/real estate agent on your side when purchasing a home is a great tool. They take your through the necessary steps toward buying a home from looking at houses to signing the papers. Deciding on your realtor may be a tough decision and there are many to choose from. It is a good idea to ask around among family members, friends and coworkers to see if they have worked with any great realtors that can help you. Also, most realtors will have reviews online that can help you determine if they are the right person to help you. If you find that you are wanting to switch realtors that is completely fine as well as long as you have not entered into a contract with them. Realtors work off of commission and will not be paid if they do not find a house for you to purchase.
After choosing a real estate agent you will want to build a relationship with them. You will first want to go over the basic things you are looking for in a home: your price range, home layout, location needs, etc. This will help them narrow down which homes to look for and show to you.
It is the job of your real estate agent to find you a home. There are many things that go into this and many agents are willing to go above and beyond to find you something suitable and assist in making the transaction. Listed to the right are things you can expect your real estate agent to do for you.
Choosing Your New Home
There are many things to consider when looking at homes to buy. Some of the biggest considerations include:
- Price of the home- Search for homes that you can realistically afford.
- The layout or floorplan of the home- openness, location of bedrooms, etc. How many levels are in the home?
- Number of bedrooms/bathrooms- how large is your current/future family
- Size of garage- How many vehicles do you have? How much storage space will you need?
- Size of your yard- Do you have pets or children that will need room outside? Hobbies that require outside space?
- Kitchen size- If you are in the kitchen a lot how much space do you need? Is there ample storage space for your kitchenware?
- Room sizes- Do you have a lot of furniture, electronics, etc. that you will need more room for?
- Is there a basement? Do you need one for extra room? Is it finished or unfinished?
- Is the home move in ready or will it need touching up? For some people fixing up a home can be fun and make the space more personal. How much will it cost to fix up the things you will need to?
- Location- Is the home in a good neighborhood? Is the home nearby schools, stores, your workplace?
- Is there an HOA? How much are the HOA fees?
All in all, find a home that you can live comfortably in. This goes not only for the price but for all the other considerations listed above. Owning a home is a long-term responsibility and you will want to be happy and comfortable with your decision.
Buying Your New Home: Sealing the Deal on Your House
So what do you do when you find the house you want? When you find the home you want to purchase you will need to put in your offer. This involves your real estate agent working with your broker/lender to put together all the necessary paperwork to get you on your way into your new home.
There are several things to consider when making your offer. If there are other offers on the table you will have to outbid the other buyers. Your agent can work with the selling agent to find out if there are other offers. If there are not other offers at the time this does not mean that there won't be by the end of the day. Depending on how the housing market in your area is it may be harder to submit the winning offer. In areas where the market is short on houses there may be ten other offers on the house by the end of the day.
After your offer is accepted there will be closing costs, paperwork, and probably some stress to deal with. Do not get discouraged if your offer isn't accepted or if your contract falls through, especially in a large, quick-selling housing market. You may get let down a few times but eventually you will be in a home that you can be proud of and make your own.