First-Time Buyer’s Guide to Success
Deciding to purchase your first home is a giant leap forward toward finding the property of your dreams. However, you’ll also need to take some less-exciting, but totally necessary steps, before you pack up and call the moving company. The below steps will help guide a first-time buyer to success by providing a useful framework for where to begin, as well as an ideal path to follow in your search for your first home.
1. Determine your monthly budget – before you look at homes.
This is a tough one, but many first-time buyers make the mistake of falling in love with a home before determining whether they can truly afford it. Protect yourself by determining your monthly budget up front, and including costs for the mortgage payment, taxes and insurance.
2. Get your down payment ducks in a row.
Depending on the type of loan you end up with, you will need at least 3.5 percent as a down payment. This amount works if you get approved for an FHA loan, but you may need 5 percent to meet the terms of a conventional loan. Think about how much you have in savings, whether you can borrow from family, or whether you need to examine down payment assistance programs in your area.
3. Interview three mortgage lenders.
Whether they’re bankers you’ve worked with before, referrals from a family friend or a stranger you found on the internet, you’ll want to interview potential lenders before deciding who to go with. It’s best to meet with at least three before choosing, so you can gather information about their knowledge, services and personal style.
4. Apply for mortgage preapproval.
This is done through your chosen lender, and it’s different than prequalification. Preapproval is a more in-depth financial approval process, and it is taken more seriously by buyers once you make an offer on a home.
5. Enlist a professional realtor.
Just like your search for a mortgage lender, you’ll want to meet with several licensed realtors before deciding which one is right for you. Attending open houses in your desired neighborhoods is a great way to experience a realtor’s style and offerings, and it can introduce you to those who know your preferred areas the best.
6. Understand what you need in a home.
Make a list of your top five must-haves in a home, and share it with your chosen realtor. Ask to be shown only homes that check all of your “essential five” boxes so you won’t waste time on properties that simply don’t fit the bill.
Once you’ve laid the groundwork, your home search can truly begin! By following the above guide, you’ve set yourself up for success in finding the first home of your dreams.
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