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As you contemplate starting your first home-based business, you may also be excited about the possibility of buying your first home. But how should you go about it? Read on to find out what to do.
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Owning a home is a significant achievement, but it’s also a huge responsibility. Because today’s real estate market is even more complex, first-time home buyers must learn a lot before paying for their first house.
If you’ve asked around a bit and feel overwhelmed about the entire process, know you’re not alone. This article will answer your questions about buying a house and provide a step-by-step guide for buying your first home.
Step-by-Step Guide for Buying a Home
So, do you think you’re ready to buy a home? Follow this step-by-step guide to understand what you’ll need to do along the way.
1. Determine If You Want to Buy a House
Buying a house is a major financial and emotional commitment. You’ll have to ensure you can afford a house. First, you want to consider how you’ll finance the purchase. Will you be taking a loan, or will you independently foot the bill?
You should also consider the emotional and personal aspects of this decision. For example, look at your career trajectory. Would you need to relocate soon for work? Also, consider your family’s needs to ensure that buying a house does not deprioritize other crucial expenses. Carefully consider these factors to see if you want to buy a house now or if you’d like to wait a bit longer.
2. Start Saving Early
Besides the house costs, there are several other expenses you must consider when preparing to buy a home. For example, the costs of hiring an excellent real estate agent, buying items for the house, paying the mortgage, and repairs can add up quickly. So, ensure to save more than the amount you intend to pay for the property.
3. Get Your Finances Under Control
As a potential homeowner, mortgage lenders need to understand that you can afford the expenses of getting a home. As such, you’ll need to maintain an excellent credit score, debt-to-income ratio, liquid assets, and so on. Having such documents ready will be crucial, especially when opting for home buyer loans.
4. Determine How Much Down Payment You Can Afford
A down payment is a lump sum that a home buyer gives to the mortgage provider as partial payment for the house. Your down payment percentage may vary depending on the package you’re using. FHA loans typically offer options for smaller down payments than conventional loans.
5. Have a Wish List of What You’d Like in Your First Home
When buying a home, it’s essential to choose one that you’ll enjoy living in. That will require careful thought. You can create a list of features you’d like in your new houses, such as floor size, number of rooms, and ideal location. Arrange these features in order of priority, so you’ll stay focused on what’s important.
6. Shop Mortgage Options
Your mortgage type greatly affects how you qualify for a loan and the kind of offer you can make for a house. Several private and government organizations provide multiple mortgage options. For example, if you have a great credit score, you may be able to get a conventional loan. If your credit score is not so high, you may also be able to get an FHA loan.
7. Apply for a Loan Pre-Approval
A loan pre-approval shows you and your real estate agent how much you’re capable of paying based on your finances. That helps the real estate agent determine which houses you can comfortably make an offer for. It also shows sellers that you have the finances required, giving you an edge over other buyers.
8. Get a Real Estate Agent
A great real estate agent is your ticket to getting the best deal your money can buy. They’ll help you navigate the real estate market to find the best houses that fit your loan package. A warning, though: Don’t hire a real estate agent who is selling the house you want to buy. You’ll need an incentivized agent to negotiate a good rate for you.
9. Shop for a House
When you find your real estate agent, it’s time to explore the market for a new home. Armed with your wish list of must-have features, get a good look at the homes in your mortgage range. The price is not the only aspect to consider at this point, so ensure that you make a holistic decision.
10. Make an Offer
After you and your real estate agent have determined a suitable house, it’s time to make an offer. Your offer may be accepted or rejected, or you may get a counteroffer. This is another stage where your agent will pull his weight. A good real estate agent will help you through the negotiation to get a good deal.
11. Get a Home Inspection
Often, your first visit to the home may seem a good indicator of whether a house is suitable for you. However, only a professional inspection can help to reveal issues with the house that could break the deal or help you negotiate repairs properly. Many people are skipping this step nowadays, but as a first-time home buyer, it’s probably best to do your due diligence.
12. Get a Home Appraisal
Mortgage lenders only want to pay what a house is worth. An appraisal is a professional estimate of the house’s worth on the market. Getting an appraisal confirms that you’re not buying an overpriced house, giving you a fair deal.
13. Negotiate Any Repairs or Credits
Based on your appraisal and inspection results, you may negotiate repairs with the seller. You can ask the seller to provide credits or ask for a lesser price on the house, based on how much repair you have to do. It’s okay to walk away at this stage if you’re not satisfied with the seller’s response, but if the seller agrees, you can proceed.
14. Close on Your New Home
When you and the seller have agreed on the final terms, it is time to close on the house. At the closing meeting, you can then sign all the final documents, including the settlement statement, mortgage note, and deed of trust. When this is done, you’re now a new homeowner.
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Ready to Own Your New Home?
Buying a new home is a long process, especially for first-time home buyers. But if you’ve committed to this decision, ensure to stick through the process. A St. Louis mortgage lender can help you start the process of owning your own home. In the end, you’ll become a proud new homeowner!
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