Tips for First Time Home Buyers

Buying your first home is considered one of the biggest investments and milestones in life. It’s a big commitment, and there’s a good chance this will be the largest purchase you’ve made to date. As you prepare, here are the steps to follow as you buy your first home.

First, you should determine if you are ready for home ownership because owning a home is a lot more expensive than renting since you’re responsible for added costs like home repairs, utility costs, garbage pickup, water, and electricity. Sit down and make your own budget, estimating as best you can these added expenses that many people often overlook.

Consider paying off any current debt (or at least reducing your debt) and saving up an emergency fund before you purchase your first home. Get rid of high-interest credit cards. While you may be under pressure to buy a home from friends or family, it might make sense financially to wait until you’re truly ready.

Most people need a loan to make a home purchase. In many cases, it makes sense to get pre-approved for a mortgage before you begin shopping for a home. Your pre-approval can provide you with an idea of how much you can afford. Look for reputable local lenders or ask someone for a mortgage broker referral. Set an appointment to discuss qualifying and different types of loans.

There are different types of loans and also different repayment terms. Some buyers choose a 15- or 20-year loan because the term is shorter and you might be able to lock in a low rate. On the other hand, the reason 30-year loans are so popular has to do with the fact that a longer-term usually means a lower monthly payment. You might have a slightly higher interest rate, but the payments are usually more manageable.

Once you have determined how much you can really spend and are pre-approved for a mortgage, look for a good real estate agent. Your real estate agent should listen to your wants and needs carefully. They may make recommendations or explain the market to help you find a home that suits your needs and that you can afford.

Once you make an offer, your real estate agent should work to negotiate terms that you are happy with. They can also guide you through the paperwork and the process needed to successfully close. Consider using a buyer’s agent — someone who is bound to help the buyer. A listing agent is responsible to the seller, so it might make sense to have someone in your corner.

Once you’ve found the home for you, make sure to get a thorough home inspection. This is different from an appraisal. You should pay for the home inspection. The home inspector will look for hidden problems with the home before you purchase it.

Through the home inspection, you can learn about any issues that may prevent you from buying the home. This may include mold, termites, foundation problems, or a roof that needs to be replaced. The inspection can save you thousands in repairs later on. Additionally, you may be able to negotiate a lower price if you know the home needs major repairs.

Consider an independent home inspection, separate from the one the homeowner’s used. In many cases, the results of a home inspection can be grounds for pulling out of a deal without losing your earnest money.

Once you have bid on your home and the offer is accepted, you will go into escrow. The escrow holder will work to make sure that all the documents, money and other necessary information are properly prepared before you close. Escrow is set up to protect the buyer, the seller, and the lender. It can take time to complete escrow, depending on a number of factors. It’s not uncommon for a closing date to be three to five weeks in the future.

When the closing date arrives, you show up and sign the final papers. The escrow agent will release the funds to all appropriate parties. Once you have closed on your home, it is time to move in. You can paint, unpack and enjoy your new home!

Be sure that you change your address with your bank, and other accounts. You can set up your utilities and cancel your old ones as well. This will save you time and money because you will avoid late fees. Some companies will waive installation fees if you transfer your old account to your new address.