The spring housing market is heating up and maybe you’re thinking about making a move. Still renting but wanting to own? The road to home ownership is easier than you think. Learn more about the process with our 10 steps to buying your first home.
1. Get your finances in order
Begin by checking your credit report for free at freecreditreport.com. If your credit score is fair or lower, try to pay off some debts to raise your score. If it’s good to excellent, you may be in a great spot to purchase your first home.
2. Find a lender
If you have a bank or credit union that you already have an account with, start there. Ask to speak with one of their residential lenders. They can help you figure out what you’re able to qualify for.
3. Decide upon budget
Your lender will tell you the amount you qualify for in terms of a home price, but that doesn’t mean that’s what you should spend. Think about where you want your mortgage payment to be, and that you’ll have to be ready for additional expenses you might incur with homeownership like repairs, updates and more. If you don’t have 20% to put down, don’t worry! This is a common misconception that 20% down is needed to purchase a new home. While having a downpayment can lower your overall mortgage amount, it’s not a necessity!
4. Find a realtor
Get recommendations from family, friends or your lender to find a REALTOR® you want to work with. Meet with the REALTOR® to make sure it’s a good fit. They will be helping you through a very exciting and important process, so you want to make sure you vibe well together. Even though they will be providing you their service, you won’t have to pay anything – this fee is covered by the seller of your new home!
5. Location, location, location
Think about what type of area you’d like to live in – city or rural, close-knit neighborhood or a home with more land, etc. Do you have kids in school and would like to stay within a certain district? Do you want to be close to certain amenities like public transportation, restaurants or your workplace?
6. Wants vs needs
Make a list of needs and wants for your new home. Things to think about – minimum number of bedrooms and bathrooms you need, garage (necessity or not?), do you want to be in charge of your exterior maintenance, or would you rather have homeowner’s association fee that covers snow removal and lawn care, etc?
7. The hunt is on
Look at potential homes with your REALTOR®. Don’t be discouraged if you don’t find your home at first. Be open to comprising on certain wants if a home fits your needs – you can always make updates or changes in the future.
8. Make an offer
With the help of your licensed REALTOR®, make an offer on the home. Your REALTOR® will run comps on the neighborhood and similar properties to see what fair market value is to help you decide on an offer price. You may also decide to include certain contingencies in your home offer like getting a home, pest or radon inspection.
9. You’re almost there…
Your REALTOR® will guide you through the process of contingencies, which includes you conducting your due diligence of the property. This will be the time that you get inspections (if you have chosen to), an appraisal and more. Both you and the seller will receive a report of the home inspector’s findings. You can decide if you want to ask the seller to fix anything that the inspector found. You will have a chance to do a final walk-through before the closing to make sure any repairs have been completed.
10. Move in!
The day has come – closing day! You will meet your REALTOR® and lender at your bank or credit union to finalize the purchase of your new home. After completing paperwork, you’ll receive the keys to your new home. Congratulations… you’re a homeowner!