Buying a home for the first time is challenging, frustrating, and rewarding all at once. Many times first time homebuyers will either settle for the first home that falls in their price range or give up altogether and continue to rent and, by default, pay for someone else’s mortgage. We are here to help you. The Glenn Realty Group is comprised of seasoned real estate professionals that will work with you to make this seemingly daunting task manageable and fun. To get you started, we are writing this brief guide in the hopes that it may demystify the home buying process and help you get the most out of your first home purchase!
Considerations Before You Buy
Before you buy your first home, you are going to want to determine what your long-term goals are and then figure out where home ownership fits into those plans. Are you looking to turn wasteful rent payments into mortgage payments that will actually yield something tangible over time, or are you looking to establish your independence by potentially becoming a landlord? By determining what your motivations are, you will be able to make a better buying decision. Here is a list of four questions to ask yourself as you begin this process:
What type of home best suits your needs?
When buying a residential property, you will quickly find that you have several options: You could buy a single-family home, a condo, a townhouse, or a multi-family home with two to four units. Each option has its own set of pros and cons that you will need to consider and see how they fit into your overall goals. Deciding which property best fits your goals is an important step in the home buying process. If you want a bigger property than your budget allows, you could buy a “fixer-upper” that requires some sweat equity to see the full value, or you could buy a smaller “turn-key” home that is move-in ready as a stepping stone to your dream home.
What specific features will your ideal home have?
Having some flexibility is good, but keep in mind that for most people, purchasing a home often represents the largest investment of their lives. You will need to think carefully and choose wisely to ensure that your purchase fits both your needs and wants as closely as possible. Your list should have your “Must Haves”, “Nice to haves”, “Bonus Options”, and “Your Wants.” You will need to consider larger things like neighborhood and home size, down to small details like floor plans and appliances.
How much mortgage do you qualify for?
Before you begin shopping for a home, you will need to get an idea of how much money a lender is willing to qualify you for. While you feel that you could afford a $300,000 mortgage, a lender may think otherwise and only qualify you for a $200,000 mortgage. Lenders look at a multitude of factors such as monthly income, current debt, employment history and consistency, and many other things.
How much home can you actually afford?
Remember that when you own a home, you will be paying for more than just a mortgage. While you may have been paying a flat fee for your current rental, now that you will own your own home, you are going to have to factor in things like utilities, insurance, property taxes, and incidentals like a broken pipe, or other repairs that might pop-up unexpectedly. Also, look at what your closing costs are going to be; do not go into the process thinking that you are just going to be making a single monthly payment or that the purchase price of the home represents the true price of closing the deal.
The Buying Process
Once you have decided that you are ready to begin shopping for a home, you will need to know what to expect during the actual process of buying a home. It is not as simple as “here is the money, now give me the keys.” This process can be chaotic at times with offers flying across the table from both sides, but if you prepare for this process, it becomes much more manageable. The basic progression you can expect is:
Consider your financing options and secure financing.
There are a lot of programs out there for first-time homebuyers designed to help them move into a home, for example, federally backed loans and loans designed to help first-time buyers who cannot afford the standard 20% down payment. Be sure to shop around to find a loan with the best interest rate, this time will pay off big time in the long run.
Find a home.
It goes without saying that you cannot make an offer on a home if you have not found one. There are multiple ways that you can find a home, such as using the professionals with Glenn Realty Group, driving around your desired neighborhoods looking for homes for sale, and searching online listings. You can also ask family and friends if they know of anyone trying to sell a home.
Make an offer.
We are here to help you figure out what a reasonable offer would be for the home you are looking at and guide you through listing any conditions you may want to ask for, like having the seller cover closing costs or including repairs that need to be made for the deal to close. This is all part of the negotiation process and it will continue until both sides agree to the deal or both parties decide to end the negotiations and move on.
Obtain a home inspection.
Always obtain a home inspection as part of buying a house. We have a list of trusted home inspectors who will perform a thorough home inspection to assess quality, safety, and the overall condition of the home. If there are serious defects in the property that were not disclosed by the seller, you will have the opportunity to rescind or modify your original offer and get your deposit back.
Close or move on.
Once you have obtained a home inspection and negotiated a deal with the seller, you need to be ready to close. During this step you should expect to cover any closing costs and have a home appraisal performed for your mortgage company. We will also perform a title search to ensure that no one else may have a claim to this property.
Congratulations New Homeowner … Now What?
Now that all the paperwork has been signed, you have had a nice hand massage to get rid of hand cramps, and you have the keys the rest is easy, right? Not so fast, there are some final considerations to look at.
Now that you own a home, you will be able to appreciate when you hear that a home is a never-ending project. Appliances break, tax laws change, and remodeling is always an option. Be sure to establish an emergency fund to cover an unexpected expenses and make sure you always have money in the bank to ensure that you will not be caught off guard when these random expenses inevitably arise.
Perform regular maintenance.
Your home represents a very large investment in your future. Be sure to perform regular maintenance on your home to help mitigate repair costs by fixing problems before they start.
Ignore the housing market.
Your home value only matters when you buy it and when you sell it. Paying attention to your property value on a regular basis is only going to create undue stress. It is your home, enjoy it.
Do not rely on making a killing on your home to fund your retirement.
Do not count on your home being your retirement fund; it is merely one part of your portfolio. You still need to save and invest wisely if you want to be prosperous for your entire life.
This overview is by no means comprehensive; its purpose is to help you understand the process you are about to embark on. When you are ready to make the move into your own home, you can count of the experts with Glenn Realty Group to help you.