If you are about to call yourself a first-time homeowner, it helps to take things slowly to avoid mistakes. The baby steps listed below will help you make sense of the sometimes confusing path to finding and buying a home. Read on to learn more.
1. Save up a down payment – Not all loans require a down payment, but the more you can save up the greater your chances of a loan approval. Not only that, you may want a home that would be out of your reach except for the down payment. Conventional loans typically require borrowers put down at least 20% or more of the home's purchase price, but there are some government-backed loan products that require little to no down payment. If you do manage to snag a home without having to pay a down payment, you might be required to purchase private mortgage insurance (PMI).
2. Shop for a lender – You might be surprised at how interest rates can vary from lender to lender and also how much a tiny point can raise or lower the total cost of your loan. Pay close attention to the locked rate time period. Most lenders allow a buyer about 90 days to close, but it can be less than that.
3. Find a real estate agent – Are you required to use a real estate agent to find you a home? No, but you will be glad that you did. Agents are in-the-know about home values, the market, when a home is about to come on the market, and more. You won't need to pay the agent anything for their expertise and agents are a wealth of information about all aspects of buying a home. They can be especially helpful for those just entering the world of home buying.
4. Make a list of home must-haves – No home is perfect and identifying your top five or so priorities will help keep things more realistic. Your lender will let you know your price ranges and your real estate agent can then show you homes that meet your needs within those parameters.
5. Visit some open houses – You can find these events every weekend and they can be both fun and educational. You can learn about a neighborhood from the inside out and even meet an agent if you have not already done so. As long as you have already completed the above steps, your home may be waiting for you with open arms during one of these events.
Speak to a real estate brokerage agent to learn more.