Home-Buying Checklist: Practical Steps to Buying Your First Home

While there isn’t a one-size-fits-all set of rules for buying your first home, there are a few basic guidelines that you should follow to make this experience go as smoothly as possible. Keep reading for a home-buying checklist for first timers like yourself.

  1. Build Credit Before Buying a Home

A major part of any property purchase is finding the means to finance it. Unless you are purchasing your new home outright in cash, you’ll need to borrow money. The higher your credit score, the likelier you will be approved for a low-interest loan. Regardless of what your budget or current credit score is, you should work to build up your credit as much as possible before you begin your search.

Start building your credit by checking your credit reports. Staying in the know is half the battle. As your credit score is calculated from your credit reports, it’s critical to keep up with all of this information. Aspiring homeowners that are aware that they have less-than-stellar credit should take steps to fix their credit no later than six months prior to buying their home.

  1. Shop Around for a Loan

Start your search by getting pre-approved–this will help to refine your search to your preferred price range. While it’s ideal to do as extensive a search as possible, speak with at least three lenders before you decide to take out a loan.

Many people that are purchasing homes for the first time use mortgage brokers to find the best loan. A good broker will point you to the most ideal rates for your budget. Similarly, speaking with your local credit union or bank will give you even more options when it comes time to finance the purchase of your new home.

  1. Choose Payment Options Wisely

As you search through different types of loans, you’ll see that they vary greatly by interest rate and repayment options. Oftentimes, a fixed rate for a 15-year or 20-year loan is a good choice as it allows homeowners to take advantage of a lower interest rate.

Similarly, before choosing a loan, think about how much you can cover for your down payment. Your property purchase should be a stepping stone in your journey to building wealth. By offering more for a down payment, you’ll be able to accept a mortgage with a lower interest rate. Whichever option you choose, remember that you never want to owe more than the home is worth.

  1. Stick to Your Budget

In your search for your dream home, it’s easy to fall in love with a home that meets every one of your needs. However, if that home exceeds your budget, you’d do best to stick to properties that you can afford.

Experts recommend that new homebuyers stick to a mortgage (along with the cost of insurance and taxes) that is around 25% or 30% of their income. Others suggest that the total cost of the home be limited to only two and a half times the amount of your annual salary. Overspending on your mortgage will cost you in the long run when it comes time for retirement.

  1. Find a Trusted Realtor

Once you’ve established your budget, it’s time to find a trusted realtor. Your realtor of choice should listen to your needs and make recommendations accordingly. Additionally, they need to be able to explain the real estate market to you and point you to houses within your budget.

The right realtor will have a variety of different options for you to choose from. Once you come to a decision, the realtor should begin negotiations with the seller to get you the best deal on the home.

  1. Request an Inspection

A home inspection is an essential part of any property purchase. While some homeowners may try to skate by without paying for a home inspection, going without one can cost you thousands of dollars in the long run. With a home inspection, you’ll get an expert opinion on your property which will help you determine if it is a good purchase or not.

For example, if you walk through a home on your own, you may not know what to look for. In a walkthrough with a home inspector, you may find that there are significant issues that compromise the quality of the home. Instead of sinking hundreds of thousands of dollars into your home only to find out there are serious issues with it, hire a home inspector beforehand to review the property with you.

If you notice any fixable issues with the home, inform the seller. Sellers are likely to fix these problems prior to selling you the property.

  1. Be Patient When in Escrow

Once the bid and offer have been accepted, the property will be in escrow. During this time, the escrow holder ensures that all the money, documents, and pertinent information are together before you officially close. Escrow is an important final step that adds an extra layer of protection for the lender, seller, and the buyer. Despite this cautionary measure, escrow can take a while to complete.

Many new homebuyers get anxious and restless during this stage. Reduce some of this anxiety by searching Conveyancing Supermarket conveyancing quotes to find the best person to facilitate the entire escrow process. This will ensure that things go as smoothly as possible. Once you are out of escrow, you can close on your house by signing the closing papers.

  1. Finalize Details When Moving In

Closing on your new home is the penultimate step to becoming a homeowner. Once you’ve signed the documents, the home is officially yours. Get ready to move in by changing your address for all your accounts, setting up your utilities, and hammering out the details for moving day.

Purchasing a new home is no small task. As you gear up for one of the most extensive and expensive purchases of your life, be sure to follow these eight steps.

 

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