Being a first-time homebuyer means you likely have a lot of questions about where to get started, how it all works, and what steps you really need to take to find your home sweet home.
To make it simpler, we’ve compiled 6 steps you need to take as a first-time homebuyer.
Preparing for the Homebuying Journey
Getting ready to buy your first home is a big deal. While the process may seem intimidating — or downright invigorating — you can handle every step. Rather than viewing your home purchase as a monumental task, break it down into bite-sized pieces.
Not sure where to even start? We’ve got you covered. Here are the 6 steps you must take as you dive head-first into the homebuying journey:
#1. Save Your Cash
Purchasing a home costs plenty, there’s no surprise there. You should aim to save anywhere from 3.5% to 20% of what you think is in your price range (more on that later) for your down payment.
But did you know you’ll also want to have cash on hand for other parts of the buying process? It’s not just the property you have to pay for, you should also have cash on hand to cover key parts of the transaction like closing costs, agent fees, and necessary repairs or upgrades, to name a few. You’ll also want to have a small nest egg for things like moving costs and materials.
Avoid surprises or a barrier to the home of your dreams by ensuring you have plenty of cash saved up.
#2. Clean Up Your Debt
Getting your debt under control or paid off is a must when it comes to purchasing your first home. Not only do you want to ensure you can actually afford your monthly mortgage payments on your home, you want to maximize the odds of getting approved for a mortgage loan, and hopefully locking in a good mortgage rate.
Mortgage lenders look at your income, monthly expenses, credit history, and credit score as they assess whether or not to lend to you. If your debt is too high, especially in relation to your income, they may deem you too high of a risk to lend to, and will reject your mortgage loan application.
To increase your odds of getting approved for a mortgage loan, start cleaning up your debt as soon as you decide you want to buy.
#3. Understand Your Financial Status
This brings together our first two steps, but really, is still worth reiterating. Having a clear, honest picture of your financial status in both its current and future state is a must when you’re embarking on the homebuying journey. This helps you get a clearer idea of how much house you can afford.
By being clear on your finances, you can accomplish:
- Assessing how financially prepared you are for the homebuying process
- Setting new financial goals if you’re not quite ready
- Beginning to set a price range on the homes you’ll look for
#4. Get Pre-Approved for a Mortgage
Now that you’re confident in your financial position and ready to forge ahead in the homebuying journey, you’re ready to get pre-approved for a mortgage. To do so, you identify the lender you want to secure a mortgage loan from, submit an application, and wait for the review process.
Once your application has been reviewed, you will learn if you are pre-approved for a mortgage. If you are pre-approved, you’ll get a pre-approval letter from your lender with an offer of the specific amount they are willing to loan you.
With a pre-approval completed, you can then accurately plan your budget for home buying since you’ll know how much your lender is willing to allow you to borrow, based on your financial standing.
#5. Start Getting Clear on Your Musts vs. Your Nice-to-Haves
With a firmer, realistic idea of your homebuying budget now available, it’s time to start listing out what you’re looking for in a home. Would you like to be in a specific neighborhood, or live closer to friends or family? Is there an architectural style you’re drawn to? Are you dead-set on a certain number of bathrooms?
Once you create your house wish list, you’ll then want to drill your list down even further. Start by identifying your must-haves, or home features or qualities you require, then identify your nice-to-haves, or features that would be a bonus but you’d also be willing to compromise on.
By doing this exercise, you can prepare yourself for a realistic homebuying journey. Not every home will have every feature in one place, so it’s important to set the standards of what you’re looking for, but to also leave wiggle room to ensure you find the right home for you.
#6. Work with a Trusted, Professional Agent in Your Area
We saved the best for last for a reason: this is the most important step you’ll take on your homebuying journey. You’ve made it to the finish line of being as prepared as possible, and now you need a professional to help you find the perfect home for you.
By working with a professional real estate agent, you get a wealth of help in the following areas:
- They know the market like the back of their hand
- They know what’s selling for how much
- They’re deeply skilled in negotiating on your behalf
- They’re experts in the homebuying process and can guide you every step of the way
- They love helping first-time homebuyers
To find a professional, skilled, and active agent in your local area, use RealEstateAgents.com and begin having conversations today!