Becoming a homeowner is one of the most satisfying things to accomplish, especially if you are a first-time owner. Finding the right house is a task, and there are specific steps involved before becoming a first-time homeowner. It might seem complicated, but done right, any individual can get their dream home at value for their money. Familiarizing oneself with these various steps can help one navigate the real estate market with ease.
Save for Down Payment
The first step a potential buyer should figure out is their finances. For first-time owners, buying a house would require gathering a down payment. In this case, most individuals will opt for a mortgage, whereby a lender assists the individual with the money, and they get to pay it back over time. However, to be eligible for a mortgage, a down payment will be required. An ideal down payment should be between 3.5 to 20 % of the home price to avoid additional fees.
Know Your Credit Score
The second step is to check one’s credit score. A credit score can simply be affected by forgetting to pay a couple of credit cards. A decent credit score is required in addition to having a down payment. It consists of a three-digit number, a detailed document comprising a summary of how well an individual pays back their debts, such as student loans and credit cards. A lender will go over an individual’s credit score to ascertain how well they pay their debts before lending out the money in terms of timeliness. The truth is that a lender will use this information to determine whether or not to lend individuals money and at what interest rate. Late payments on the part of an individual or blemishes on the credit report will force the lender to raise the interest rate or decline, giving out a loan altogether. One must know their credit score and take the necessary steps in improving it.
Get Pre-Approval
Before beginning house hunting, it is crucial to get a pre-approval from a lender regarding a mortgage. An individual will meet with a loan officer who will analyze the prospect’s financial history and background, such as assets and debt to income ration, to establish what monthly payments one can afford or whether to lend out money. This action will help one establish homes in their price range. This is important, as a purchase price beyond one’s financial ability will make it challenging to keep timely payments and run the risk of defaulting a loan.
It is essential to understand that mortgage pre-approval and mortgage prequalification are different. The latter ensures a more straightforward process that can give an individual an estimate of what they will be able to borrow, despite no guarantees from the lender. The former is more of a hassle as it entails dealing with a lot of paperwork but works the hassle as it, in effect, guarantees the worth of one credit score and makes it simpler to purchase a home. A more straightforward way for potential buyers to determine whether they can afford is going online and using a home affordability calculator. This will give them a rough estimate of how much they can afford to pay monthly.
Find Real Estate
The fourth step is to find a real estate agent. Most first-time homebuyers will be looking for a great real estate agent as they are not well versed in the market, such as the San Francisco Bay area, Hayward, or California. These agents will assist them in finding a home, negotiate a price, and guide them on all the intricacies that involve identifying up to the process of closing on one. Most services by these agents are free for first time home buyers as these agents as their commission is sourced from the seller of the home.
Find Home
The fifth step is looking for a home. A first-time home buyer can go online and peruse through thousands of listings to find their ideal home. After identifying a few potential properties, one can set up a meeting with an agent to go around the houses in person. A good example is the San Francisco Bay area, Hayward, or California. The number of homes available will be numerous. It is imperative to separate the features which are interesting from the must-haves, and those that are not required. Questions that the home buyer should ask are: do you want a fixer-upper or a new home? They should jot a list of their wants to get started and narrow it down as they continue.
Make an Offer
The sixth step is to make an offer. After identifying the ideal home, it is time to make an offer to the seller.
Have a Home Inspection
The seventh step is a home inspection. This entails hiring a professional home inspector to go through the house looking for signs of wear and tear, mold, asbestos, termites, and a faulty foundation. If it’s a fixer-upper, an assessment will determine how much work is required before becoming habitable. The inspection also determines whether the price is value for money. There could be many issues to be addressed, but in most cases, they can be fixed.
Get a Home Appraisal
The eight-step is to get a home appraisal. A lender will want to carry out a home appraisal if the home buyer gets pre-approved for a loan. The lender arranges for a visit and inspection to establish whether it is a good investment or not.
Close the Sale
The ninth step is to head to closing. Closing, also known as escrow or settlement, brings the various stakeholders involved in the home acquisition process together, such as mortgage representatives, agent, buyer, and seller. Closing is the day when the different costs are settled upon and gain ownership of the house.
Move-in
The final step is to move into the new house. As seen above, the process is not that complex.
Point to Note
Something to note and think about is finding a trustworthy real estate agent. Most of them are licensed and registered, and their credentials can be checked easily online. A first-time home buyer should look at real estate agents well versed in the area of operation to get value for money.