Guide for first time home buyer
I’m a first time home buyer. What do I have to do?
It's easy to feel overwhelmed with down payments, credit scores, mortgage rates (both fixed-rate and adjustable-rate), property taxes, interest rates, and closing the deal.
Here, I can help you understand the real estate market with ease. In this step-by-step guide, you'll learn what it takes to buy your first home, from beginning to end.
#Step 1: Down payment
#Step 2: Check your credit score
#Step 3: Get pre-approved for a mortgage
#Step 4: Find a real estate agent
#Step 5: Looking for your house
#Step 6: Make an offer
#Step 7: Get a home inspection
#Step 8: Home appraisal
#Step 9: Closing
#Step 10: Move in!
Buying a new home (particularly for the first time) requires a mortgage, where a lender fronts you the money and you pay it back over time. In order to get a mortgage, you'll need some sort of down payment.
A down payment is a type of payment, often in cash, made in the early stages of a purchase of an expensive good or service. In some cases, the down payment is not refundable if the deal falls through because of the purchaser.
Normally a down payment on a mortgage should be 20% of the home's price to avoid added fees. A mortgage down payment also can be as low as 10%, 5%, or even 0% for certain types of mortgages (e.g.,V.A loan or USDA loan).
Step 2: Check your credit score
Forgetting to pay off a couple of credit cards will affect your credit score.
A lender will check your score and report in order to estimate the odds that you will deliver your monthly payment, too.
If your credit score is solid – most lenders consider FICO® Scores of 740 or higher to be excellent ones – you'll usually be able to qualify for a conventional loan with a low down payment requirement and low interest rate.
Step 3: Get pre-approved for a mortgage
Before moving forward with home buying , you should seek pre-approval from a lender for a home loan. A meeting with a loan officer will give you the idea of how you can get the loan and the estimated amount that you may get.
Your lender will order an appraisal of the home to make sure you’re not paying more for the home than it’s actually worth. An appraisal that comes back lower than the purchase price could cause problems for your loan.
Your lender also will calculate what size monthly payment you can realistically afford.This will help you target homes in your price range.
Step 4: Find a real estate agent
My suggestion for first-time home buyers is find a good Real estate Agent - the person can help you to find the right houses, explain all of the process you have to get through and negotiate a great deal for you.
And good news for first-time home buyers is you don’t have to pay the commission for your agent because the seller will pay for that.
Step 5: Looking for your house!
Getting online and looking up houses on the internet is a good Idea for home buyers to have the sense of what type of home you like, what area is the best for you. When you have the feeling of the right properties for you, let’s set up the appointments with your agent to look at your favorites in person.
Step 6: Make an offer
When you find your dream home, let's make an offer to the seller. Your agent will help you with the paperwork.
Step 7: Get a home inspection
A home inspection is designed to provide the home buyer with the information they need to make a more informed decision about the property. Home inspector will check out the house from top to bottom and put in the note if there are any problems with it like:termites, faulty foundation, mold, asbestos, etc. that might make you think twice about moving forward.
Most problems are fixable but you should consider the cost for fixing them. These can be negotiated in an updated purchase contract.
Step 8: Home appraisal
When you’re buying a home, the lender will order the appraisal after you’ve made an offer and signed a purchase agreement. The lender checks out the house to make sure it's a good investment. It's similar to a home inspection, but for your lender.
Step 9: Closing
Closing is also known as settlement or escrow. Close of escrow means essentially that a real estate transaction has been completed and that the sale is final.
Closing is the day you officially get the keys to your new home and pay all the various parties involved. That will include your down payment for your loan, closing costs, the extra fees you pay to process your loan.
Step 10: Move in!
The long process of buying a home is so much easier with your real estate agent.
Now it's time to enjoy the many benefits of becoming a homeowner.