First Time Home Buyer & How to Prepare to be a Homeowner
First Time Home Buyer & How to Prepare to be a Homeowner
What do you want?
When it comes to buying a home you have several choices, you can buy a condo, an apartment, a single family home or a duplex, for example. The first step would be to figure out which one of these makes the most sense for your situation or family.
Do you want to be close to work, schools? Is walkability important to you? What kinds of amenities are nearby? What’s the commute like, and is public transportation close?
Once you’ve figured out the type of home and where you would like to live, then it is time to start thinking about your dream home and it’s finishes, like the size of the home, size of the back yard, how many bedrooms you need etc.
Some of those preferences will be just that, and some will be dealbreakers. If you have a large dog or children, you may find a good sized backyard on your “must have” list. You will be suprised at how that “must have” list can change once you start looking and see what’s on the market and available at your price point. While it is good to know what you want, you must be willing to compromise and adjust the “must have” list as you search for a home.
It’s best to keep an open mind and be flexible. Even if you have a friend that lives in the neighborhood you are looking at, now would be a good time to find a local realtor. They help people just like you every day and they may even know of pocket listings not on the market yet that match your search criteria. A realtor can also get you information on costs to update/change the home to meet your current needs as well.
Are you financially prepared?
This would be one of the reasons you would want to talk to a real estate agent early in the process. There are a lot of things that you can do to help get on the right path to homeownership. Most of this should happen before you even start to look for your dream home.
If you aren’t already connected with a mortgage broker, start here. Mortgage brokers are experts in the different types of loans available to you and finding the best loan for your needs.
Credit:If you need to do a little work on your credit before you can qualify for the loan, a mortgage broker or your realtor can also help you with some recommendations and tools available to you for credit repair.
Depending on your age, where you live, or if you’re a first time home buyer, you might be eligible for free money that can only be applied toward a down payment or closing costs on a home. Some programs supporting responsible homeownership require you to attend a few classes about buying a home and how to pay off a home loan. Not only will you learn some things about home ownership, It will be worth your time get up to a few thousand dollars for free, to help with your down payment or closing costs.
When you feel that you have your down payment, credit in order and are ready to buy a home, ask your lender to get your pre approval in order. This will give you the best chance to get your offer accepted if you find a home that you love instead of waiting for the lender approval. In this hot sellers market (most markets) you will want to definitely have your pre approval in hand and ready to submit with any offer you make… and you’ve already done the work, so you might as well give yourself the best chance possible of getting your offer accepted.
What can you afford?
Financial experts recommend not spending more than 30% of your total monthly income on housing.
Your mortgage payment will cover the cost of the home, interest on the mortgage loan, homeowners’ insurance, and property taxes. Depending on the size of your down payment (under 20% downpayment), you may also need to pay private mortgage insurance (PMI) on your loan.
Property tax information can be found in most listings or provided by your realtor. Taxes are calculated as a percentage of the home’s value, so property tax can go up or down depending on the housing market.
A local insurance agent can also give you a good idea of what you’ll be paying for homeowners’ insurance. You should be able to save some money by combining all your policies under one company (home, auto, loan) The home could need other insurance, like flood or earthquake insurance (flood insurance is required on some homes).
The mortgage interest rate is going to depend on a few factors; your current credit score and the current mortgage rates. A mortgage lender can help you figure out what your current options might be and may even offer suggestions for how to improve your credit score to get a better rate while you’re saving up for your down payment.
Don’t forget that whatever you have saved will be applied to the home sale amount. So, if the home you want to buy costs $300,000 and you have $60,000 (20%) to put down on the home, then you’ll be borrowing $240,000 from the lender instead of the full $300,000.
There are online calculators that can help you assess some of these factors, but again, it’s smart to talk to a real estate agent. An agent can also refer you to a local insurance agent and mortgage broker so you can start figuring out what you need to do to become a homeowner.
How do you make the best offer possible?
It can be deflating after taking all these steps to home ownership and have your offer rejected or find out you were just simply outbid.
This is where a real estate agent becomes truly valuable in the process; they’ve seen offers that were accepted and offers that were not, and they do this every day. There are all kinds of do’s and dont’s when it comes to getting an offer accepeted in a sellers market: Check Michelle Gibson’s article HERE for more tips.
A good real estate agent will be able to advise you of the best terms possible to get your offer accepted.
Once you can answer these questions confidently, it’s time to start searching for a home. You will be set to put your best foot forward and be on the path to home ownership!
More Helpful Tips:
5 Reasons Why A Buyers Full Price Offer Was Rejected – Via Michelle Gibson
What is Dual Agency: Why Buyers & Sellers Should Avoid it – Via Bill Gassett
10 Biggest Mortgage Mistakes First-Time Home Buyers Make – Via Xavier De Buck
8 First Time Home Buyer Mistakes to Avoid – Via Sharon Paxson
The Best Homeowners Insurance – Via Reviews.com
My philosophy is simple: clients come first. I pledge to be in constant communication with my clients, keeping them fully informed throughout the entire buying or selling process. I believe that if you’re not left with an amazing experience, I haven’t done my job. I don’t measure success through achievements or awards but through the satisfaction and repeat/referral business of my clients and becoming your top realtor choice when it comes to buying or selling real estate.Having spent most of my life in Portland living in Northeast, Southeast, Bethany, Hillsboro, Beaverton, downtown and St. Johns, I’m very knowledgeable of the many different neighborhoods and surrounding areas our city has to offer.