Buying your first home is an exciting endeavor. But it can also be stressful. One of the most important first-time home buyer tips is determining a realistic budget before looking at homes. Get pre-approved for a mortgage, which involves providing your financial information and determining how much you can borrow.
Create a List of Your Must-Haves
Developing a list of your must-haves will help you narrow down the homes you view. This should include everything from the number of bedrooms and bathrooms to the kitchen size and outdoor space. You should also consider what kind of neighborhood you want to live in and what schools your children will attend.
Be sure to create your list well before shopping for a home. Mortgage lenders will review your finances and savings with a fine-tooth comb, so any sudden changes can delay the closing process or even derail it completely. Additionally, you will need to be able to afford your new home and all of the associated expenses.
When creating your list, don’t forget to factor in the cost of furnishing and decorating your new abode. Remember that you will likely need to purchase some new furniture to fit the layout of your new house as well as decorations and decor to give it your personal touch. A good rule of thumb is to have a budget of about 20% of your purchasing power saved for the move-in costs. Anything less, and you will need to pay PMI, an extra fee that covers your lender’s risk in case you default on the loan.
Take a Second Look at Homes You’ve Viewed
Buying a home is an important, often life-long commitment. The decision can be complicated, especially when finding the right house for your needs. It’s important to understand the process before you get started.
Once you’ve narrowed your search to a few front runners, look at each property like those at Davidson Homes and see if it still fits your vision for the perfect home. Be sure to factor in the neighborhood’s safety and commute times, schools, and nearby amenities.
Bringing your real estate agent for the second viewing is also a good idea. This can be a great opportunity to talk with them about what you like and dislike about each home and ensure all your questions are addressed. A real estate CRM system can help you collaborate effectively with your agent and keep track of the properties you’ve visited and your preferences.
It’s also best to avoid bringing young children on a viewing or open house tour, as they may become bored and disrupt the flow of the event. They may also get excited about features that aren’t necessarily a priority for you and cause you to lose focus on what’s essential in your new home.
Ask Your Agent for a Comparative Market Analysis
A comparative market analysis is a document that helps determine home values by comparing similar properties. Real estate agents commonly use it to help clients set an asking price when listing a property for sale. A CMA is also a great way to establish an accurate homebuyer’s budget. When creating a CMA, it is important to choose comparable homes that are as close to the subject property as possible. This will ensure that the CMA is an apples-to-apples comparison.
Additionally, the amenities of similar homes should be considered. For example, one house might have a whirlpool tub while another has a standard one. The whirlpool tub could be worth thousands more than the traditional tub, so this is something to consider when choosing comparable homes.
Understanding current real estate trends in your local area is also important. Understanding if you are in a buyer’s or seller’s market will help you and your agent narrow your search for the perfect home. It will also allow you to make an informed offer on the property.
Make an Offer
Once you find a home that meets all your needs and it feels like the perfect fit, don’t hesitate to make an offer. Your agent will help draft the technical details of your purchase offer, but you’ll have to decide how much you want to pay and what other terms to include in your request.
Be sure to consider the long-term when making an offer, including how well the commute to your job or other places you frequent will be. Also, think about whether the house is big enough to accommodate your future family or if there are plans for a basement finishing expansion.
Most buyers need to secure financing unless they’re paying cash, and sellers typically prefer pre-approved buyers. Completing this step before making an offer will save you time, money and frustration. It will also keep you from busting your budget or getting into a financial situation that could jeopardize your ability to close the purchase.
Get Pre-Approved for a Mortgage
While scrolling through glossy online listings may fuel your homebuyer fantasies, the mortgage process requires a serious commitment from you and the lender. To determine whether you can afford your new mortgage, lenders must verify your income, debts and assets, a process known as pre-approval. Getting mortgage preapproval is an essential first step for many prospective buyers and can help you avoid surprises. This nonbinding process allows you to see how much you’re eligible to borrow, which can help you target your house hunt and show sellers that you’re a serious buyer. However, it’s important to note that mortgage preapproval typically lasts only 30 or 90 days. During that time, the lender will likely need to conduct a full underwriting review to ensure that you still meet their loan guidelines before they issue your final approval. A strong credit score and proving that you can manage your monthly debt payments will help your mortgage lender be more confident in offering you a loan. Additionally, each application for mortgage preapproval typically counts as a hard inquiry on your credit report, which could potentially drop your score a few points.
