Buying a home is one of the biggest investments you will make in your life. First time home buyers will find the whole process intimidating, and may be unsure of where to start. The good news is that there are plenty of resources to guide you through the process, from realtors, government agencies and non profits. These can help you at every stage of the way, from deciding whether you want choose from single family homes or luxury townhomes, to getting financing, finding the right home and closing.
Understanding the market
The first step is to understand the market, and how your home buying needs fit into it. You’ll find plenty of ads for homes for sale, but how do yo know which one is right for you? Are you among the 83% of first time home buyers who are looking for single family homes, as reported by Zillow? Or are you among the 12% looking for a multi-generational home? This is a good choice of you have older parents or adult children living with you.
Another choice you have to make is whether to opt for a new construction or older single family homes. If you choose the homebuilding option, you can design your own house. According to data from the U.S. Census Bureau, as many as 612,000 new houses were sold in 2017. And four out of ten or 40% of all first time home buyers are environmentally conscious, looking for an ecofriendly house, according to the NAHB. When you choose a custom built house, you can add in sustainability from the ground up.
Getting the financing
This is a big step, and one for which most people do have to prepare for years in advance. Not only do you need good credit to get a home loan or mortgage, you will also need to make a down payment. This can be anywhere from 5% to 20% of the value of the house, depending on the buyer and the lending institution.
Many realtors also recommend getting pre-approved for a mortgage. This means that the bank or lending institution will look at all your financial information to determine if you will be approved for a loan. This will give you a sense of what you can afford, and also the confidence that when you find your dream house, you can make an offer for it right away.
Finding your dream home
This can be the most exciting and sometimes the most frustrating part of the process. It may help if you start by finding a good real estate agent, who can guide you through the process and alert you to any pitfalls. For first time home buyers, there’s no fee because the real estate agent’s commission is paid by the seller. Then it’s time to go out and do some house tours.
While you may have a list of must-haves, keep in mind that it’s rare to find the perfect home. You may have to make some compromises, but be sure that you can live with them. Once you’ve found the perfect home, it’s time to make an offer, and then to hire a home inspector. The home inspection will show if there are any problems that need to be fixed. You may be able to use the home inspection report to negotiate on the price. A home appraisal is needed for the financial institution, and once that’s approved, you’re ready for the closing. That’s when you finalize everything and get the keys.
When buying a home, it helps to be prepared and to plan ahead. Whether you’re looking at single family homes or a waterfront condo, the steps you have to follow are all the same. If you do your homework ahead of time, you’ll find that the while process goes much more smoothly.