Brian Young is a First Time Home Buyer Specialist
Brian Young is a First Time Home Buyer Specialist
Even though there are multiple options available to first time home buyers the experience doesn’t have to be daunting. As a loan advisor I will help determine the best match for my buyers and their scenario. I enjoy educating people so they can feel empowered and at ease with their decisions.
Step 1: Consider Your Finances
In order to buy a home, you need to first ensure that you are financially stable. It is unreasonable to think about purchasing any property before you have an additional savings account with approximately three to six months of living expenses. After subtracting your living expenses, take a look at how much is left over in your savings and investment accounts that could go toward a down payment. You also need to review your monthly spending amount along with what you are spending it on. This information will dictate how much you can put toward a mortgage payment.
As you move toward shopping for a home, consider the location and costs such as transportation, school access and your commute time. These expenses are often overlooked in the home purchasing process but can certainly add up over time.
Step 2: Check into Benefits for First-Time Home Buyers
Before meeting with your mortgage broker or lender, take a look at some of the special programs that are available to make ownership more affordable. There are several out there intended to assist first time home buyers. You can learn more about credits for first-time home buyers, here.
Step 3: Find the Right Mortgage Broker
For most first-time home buyers, the ability to pay in cash just isn’t realistic. That’s why after you’ve finished your homework, your next step is to find just the right lender and/or mortgage broker. Once you’ve found the right one, your broker will take a look at your credit score and determine the amount you can qualify on a loan. He or She will then review your additional assets such as savings or 401(k), your outstanding debt and the availability of special program assistance. If you think you qualify for a certain first-time buyer program, make sure to find a mortgage broker that handles that particular program.
Step 4: Find the Best Mortgage
Even if you only qualify for one type of loan, it is important to find the best mortgage program with the best rate. Today, fees are surprisingly varied. For instance, the fees for an FHA loan may be different depending on whether are applying for the loan through a mortgage banker, local bank, credit union, or large bank. Once you’ve found the best deal you can find, it’s time to get a mortgage pre-approval so you can set a price range. Make sure you are pre-approved and not simply pre-qualified.
Step 5: Find a Realtor
Once you have established how much you can afford along with the your qualified loan amount, you need to start looking for a real estate agent. It’s often a good idea to select an agent that works with a team and can provide references for insurance agents and home inspectors. Your realtor will be responsible for contacting listing agents and setting up appointments to assist you in the purchasing process. The best part is that their service is free for a buyer as the sellers pay all the commission.
Step 6: Finding Your Home
Once you’ve found just the right house that fits well within your price range, you need to run the numbers again. This time around, consider any additional factors such as repairs, necessary amenities, closing costs and moving expenses. Unfortunately, there are numerous costs that are often overlooked by first-time home buyers. These include costs such as the home inspection, insurance, homeowners association fees, and property taxes.
Remember to also consider your new utility bill which may be drastically different what what you are used to paying. Before discussing any offers, request the energy bills from the past year in order to get an idea about what your average monthly utility cost will be. There may also be costs associated with the upkeep of the home and property. Make sure to take a look at the condition of your property and the level of upkeep it will require.
Once you have made a well budgeted offer, you need to have a home inspection. Spending as little as $500 will educate you about the condition of the property and house and allow you to perform any immediate repairs. You can also use this as leverage to make the seller financially responsible for all or part of the repairs.
The Final Word
As one of the biggest financial decisions of your life, purchasing a home is a major step toward building wealth throughout your lifetime. Be cautious with your spending and never take on more of a financial burden than you can afford. Always try to keep in mind that there are numerous costs involved in the process and that each of these can be minimized when dealt with properly.