The industry is saturated with information for first time home buyers. It is often a bit overwhelming when you are trying to gather initial information on where to start, who to turn to, and what to expect. In order to be fully prepared to find, finance, and move into a new home it is crucial to be prepared. Planning for a major event such as buying your first home is one of the best ways to remove the stress and anxiety that usually comes with it.
The first step to buying your first home is the one you are taking right this very moment, research. As soon as you get the inkling that you want to start looking into buying a home start reading as much reliable information as you can get your hands on. Websites, newspapers, industry magazines, and real estate books can all provide good information. It is also appropriate to start perusing listings to note the time that homes you are interested in are staying on the market. For research purposes take note of changes in asking price as well, all the information gathered at this point gives you a better sense of current housing trends.
The next step that we recommend you take is to speak with a mortgage broker to determine how much of a house you can afford. This can be a little tricky. It is not always wise to spend as much on a new home as you qualify for. Most home buyers want to still be able to live comfortably while owning a home. Trust your instincts when you are determining a housing budget.
More often than not lenders will approve buyers for between three to five times the amount of their annual income for a threshold. Most buyers will have a twenty percent down payment and will carry other debt. This amount usually holds this in account. Ex. If you are currently making $25,000 a year and your spouse is making $55,000 a year this puts you at a total income of around $80,000 a year. This means that lenders may feel comfortable lending you between $240,000 and $400,000 to purchase a home. This doesn’t take into consideration your down payment however does give you some figures to start with.
When you meet with a mortgage broker than can start the
process of getting you prequalified and preapproved for a mortgage. This will give you a definite answer to how
much you are approved for and can actually spend on your new home. In order to start this process, you will need
to provide your mortgage broker with financial paperwork such as documents on
income, savings, investments, and debt.
Through this process brokers will reach out to a variety of lenders to
verify your financial status, credit, and figures on borrowing from them. Each lender will have different requirements,
rates, and so forth. A mortgage broker
works as a middle man between you and the lenders to find you the best rates
Next you will want to find a local real estate agent to work with like C21, Lady of the Lakes out of Pinckney, MI. A realtor is an important piece of the home buying (and selling) process and will be your biggest advocator throughout the process. Agents are not only full of useful information on homes, neighborhoods, schools, and such, they are also important to you during negotiations. Also, it is nice to note that realtors are not compensated by the buyer and instead are paid a commission from the seller of the house. This means you pay nothing for their professional advice.
Real estate agents are important partners when you’re buying or selling a home. Real estate agents can provide you with helpful information on homes and neighborhoods that isn’t easily accessible to the public. Their knowledge of the home buying process, negotiating skills, and familiarity with the area you want to live in can be extremely valuable. And best of all, it doesn’t cost you anything to use an agent – they’re compensated from the commission paid by the seller of the house.
After you have hired an agent comes the task of finding the perfect home to call home and make an offer. When you are touring homes it is important to bring along a camera and create a checklist. This will help in keeping the different houses straight. After seeing as many houses as you will see during this process it will be hard to remember the pros and cons of each. Document as much as possible along the way.
When you find a home, you think you could be interested in do a more thorough examination of the space. Test the plumbing by running all the faucets at one time to get a feel for the water pressure you can expect. This will also give you a good assessment of the hot water in the home. Next test the electrical outlets. It is amazing how many times we go into homes where not all of the electrical switches or plugs are working properly. This could be an electrical issue inside the home, so it will save you money to discover it before paying for a professional home inspection. Another element to look at is the windows, doors, and attic/roof. Check to make sure doors and windows properly shut and seal and that attics are without mold or water issues.
If you haven’t already, take a look at the
neighborhood. Check to see how well
other houses are maintained. Evaluate
the amount of traffic through the neighborhood, parking, and accessibility to
shopping, schools, and more.
Relators will help throughout this process by supplying you with data on how much comparable homes nearby have sold for. This will help you to negotiate a fair asking price when you have decided on a home to put an offer on. When you have reached an agreement with the seller on a fair price, the home will go into what is known as escrow. At this point you will have a number of days to get an inspection, make changes to the offer, and complete the home purchase process.
Most banks will not lend to first time home buyers, or any
home buyer for that matter, without first having their investment properly
inspected. All offers are written in a
manner known as contingency. This means that
the offer is contingent on the inspection.
If the inspection goes poorly or items are found that need to be repaired,
you will have time to renegotiate or withdraw your offer without penalty.
Once the inspection has been finalized and the home repairs
(if needed) have occurred it is time to get your financing in order. Your mortgage broker already has in place the
preapprovals that you were given earlier in the process. This makes the process of selecting a home
loan quicker. Lenders will give you a
good faith estimate at this juncture that states what you can expect the monthly
payment to be, taxes included, the time you are borrowing the money for, along
with the rate at which you are borrowing funds.
It is important as well to understand the type of mortgage you are
getting. There are a few options including: Conventional, FHA, VA, USDA,
Adjustable, and so on. Mortgage lenders
will often send in a home appraiser to ensure that they are making a solid
investment in loaning you the amount of money they are for the home. This
ensures you are paying a fair price.
At this point a lot of paperwork is shuffled between real estate agents for the buyers and sellers along with the lender, closing, and title company. This is all necessary to make sure ownership of the home transfers properly. Once all parties have reached an agreement a closing date will be set.
At closing you will complete a final walk through of the
property, sign closing documents, and exchange the keys. Some sellers negotiate a time between closing
and when they have to vacate. If this is
the case with the home you are purchasing, the seller will rent the home from
you until the agreed upon move out date and then you will receive the keys to
the home on that final date.
C21 Lady of the Lakes is a full-service realtor serving
Livingston County and the surrounding areas with all their real estate
needs. More information can be found at http://www.ladyofthelakes.com/.