Just the thought of you becoming a first time homebuyer brings excitement to us because we know the ultimate joy that comes with it. Considering we are Licensed Real Estate Agents, we also know the stress that comes alongside that joy. But as long as you have the right guidance and know what to expect, you will be just fine! After all, your REALTOR® will be right by your side from beginning to end.
SAVE. SAVE. SAVE. First off, check your finances. How much money do you have upfront that you are willing and able to spend on a new home? This includes down payment, upfront fees, closing costs and any potential renovations if needed, etc. It is OK if you don’t have a lot right now, but this step will help you see where you are and determine how much more you should save until you are ready.
CREDIT SCORE. What is your credit score? If you have not checked in a while, now is certainly the time to do so. But, why? Typically, a higher credit score will get you a lower interest rate which in turn will result in an overall lower monthly payment. Isn’t that the goal, spend less than you need to?! So once you decide that you want to purchase a home, it is best to avoid any large purchases, not to cancel any credit cards, limit opening new lines of credit, and stay on top all your current bills. If you do not have a credit history, no need to panic… now is the time to start building your credit. There are several credit repair professionals out there that are willing to work with you in order to fix and/or build your credit. We can certainly refer you to one of our contacts, if needed.
MONTHLY EXPENSES. Factor in your monthly income, current housing expenses, car payment, student loans and any other monthly obligations. With all of that in mind, how much will you comfortably be able to afford per month? Are you currently renting? Think about what you are spending right now per month on your rental. Those same expenses will instead be going towards a mortgage. Soon you will be paying your own mortgage instead of someone else’s! Are you excited yet?!
PRE-APPROVAL. Next it will be time to see what mortgage amount a lender would likely be willing to approve based on your individual factors (income, credit, etc.). Honestly, you can seek pre-approval from any bank/lender, it is all based on your personal preference. Some people choose to get a pre-approval through their current bank institution since they already bank with them. Others go through a credit union, lenders associated with first time homebuyer programs, etc. Regardless of the route you take, you will obtain a pre-approval letter which helps us determine what price range to look for when searching through homes listed for sale. For example, if you got pre-approved at $200,000 then we would preview homes that do not exceed that amount.
FIND A HOME. Now that you have a pre-approval letter, know how much money you have saved, you know your credit score, and you have an idea how much you can afford per month, it is time to get out and about with your REALTOR®! You likely already have an idea of what city you want to live in, how many bedrooms and bathrooms you want, whether you want single-family or townhouse/condo, so share all of these ideas with your REALTOR®.
Together, we will determine your must-haves, maybes and definitely-nots, and preview as many homes as necessary until we find the one you like! Once we get to this step, and an offer is accepted then we will work with the lender to get the process going. We will make our way to the closing table and get keys in your hand, typically about a month or so later (give or take) if everything goes smoothly!
