So, you are ready to purchase your very first home! This transition can be exciting and overwhelming. It is important to educate yourself and be prepared for the changes in the months to come, this will help alleviate any stress along the way.
Here are few tips to get you started:
1. Finding the Right Loan for You
This is the very first step to purchasing your new home and should never be overlooked! Talk to your bank and find out exactly how much house you can afford. This should be done long before you start looking for your new home. Make sure that you get a pre-approval letter from your bank, this is a big factor in getting your offer accepted and puts you in a great place during the negotiation phase of the process. Having a pre-approval letter lets the seller know that you are a serious buyer.
2. Remember to Calculate Closing Costs
Closing costs fluctuate depending on the price of the home and where your new home is located. These costs can include loan origination fees, escrow fees, title and homeowners insurance and taxes. In most cases your lender will want to know that you have the money to cover these expenses up front.
3. What is Earnest Money?
Definition: "A deposit made to a seller showing the buyer's good faith in a transaction. Often used in real estate transactions, earnest money allows the buyer additional time when seeking financing. Earnest money is typically held jointly by the seller and buyer in a trust or escrow account." This is another way to inform the seller that you are a serious buyer. Although there is no set amount, it is common to use 1-2% of the purchase price. Earnest money will got towards the purchase price and will get refunded if the homes does not end up in your hands.
4. Wants and Needs
Keep a list of the wants and a list of the needs that you are looking for in your new home. Things you might include in your "want" list: 3 car garage, pool, spa and extra parking. Things you might include in your "need" list: 3 bedrooms, 2 bathrooms, 2000 square foot, acreage and price range. Sort out what is important to you and your families (or future families) needs and keep it handy.
5. Home Inspections
The home inspection is another expense that you would need to prepare for. This cost can be anywhere from $200.00 and up, depending on the square footage of the home, but should not be skipped. This will provide a record of the condition of the home at the time of the inspection, including water damage, electrical damage or roof damage that you may not see or be aware of before you purchase the home.
6. Finding the Perfect Real Estate Agent
Finding the Real Estate Agent for you is essential while on the hunt for a new home Be picky! A good real estate agent will listen to your needs, keep you educated and has a good understanding of the real estate market. A Buyers Representation Agreement or a Buyer-Broker Agreement lists the duties of the Real Estate Agent and the responsibilities of the Buyer. It should list all the properties that the buyer is interested in looking at and makes the Real Estate Agent responsible for showing or making these homes known to the buyer. Be sure to read this agreement, and any other agreement you may be given, carefully before signing it.
7. Finding the Perfect Home
Now for the fun part: SHOPPING! Drive around the neighborhood that you are interested in living in and keep your eyes open for "For Sale" signs, attend any open houses and search the internet. Check with your Real Estate Agent often to see if anything new has come up for sale. The Real Estate market is an ever changing thing. What may be for sale today could be gone tomorrow and replaced with your dream home the next day! Most importantly make it fun, this is big step but it doesn't have to be scary!