What Every First Time Homebuyer Should Know

3/1/2018

Are you buying a home for the first time? Purchasing a home can be complicated and intimidating, but there are some steps you can follow to help prepare you for homeownership. There are many things to consider and prepare in advance before finding the perfect home for you.

Get your financials in order

A mortgage is likely to be the largest financial obligation you undertake, and you should make sure you have a good credit report, a high credit score, and an appropriate down payment. Order copies of your free annual credit reports and review them carefully to ensure that all of the data is accurate. You should also make sure that you have saved an appropriate amount for not only a down payment, but also for closing costs, legal fees, and home inspection costs. During this process, you should also determine how much money you can truly afford for a mortgage payment, keeping in mind that there are some hidden costs to homeownership. Once you decide what you can afford as a down payment and monthly payment, you’ll know how much house you can afford.

Find highly-qualified and well recommended housing professionals

Next, find a highly recommended real estate lawyer, a real estate agent, a home inspector, and a mortgage company, prior to making an offer on your home. The best recommendations are likely to come from co-workers, neighbors, and friends. Usually, the time frame from making an offer to closing is very fast, and having the best team on your side will likely make things move much more smoothly. Once you have a few recommendations for mortgage brokers, call them to see what rates they can offer. Make sure that you ask if they have a first time buyers program.

Learn all about the home buying process

Learning more about the home buying process will also help. Each state has different processes and rules, so do some research online, or talk to your lawyer or Realtor to find out more about the process. There are some standard steps that occur during the home buying process – such as the home inspection, purchase and sale agreement, and closing. Understanding how the process works will make you feel much more comfortable.

Also learn about the type of things that you’ll need to purchase prior to your closing. Most home lenders require you to repay a full year of homeowner's insurance, and depending upon where you live, you may also need to purchase hurricane, tornado, or flood insurance. Closing costs can also add to the total costs, and inquiring about them in advance will help you prepare for them.

Once you have prepared these financial steps, you’ll be ready to visit open houses and look at for sale homes, knowing that you are ready to buy when you find just the right place.

Jesse Campbell is the Content Manager at MMI, with over ten years of experience creating valuable educational materials that help families through everyday and extraordinary financial challenges.

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