It’s been forecasted that over five million homes will be sold in the U.S. in 2020. Purchasing your own home for the first time can be an exciting experience. Maybe you’ve got a growing, thriving business and can afford a mortgage for the first time. Or, maybe you’ve been saving up for years to be able to afford your own place.
Whatever the case, even though it’s an exciting time it can also be overwhelming and scary if you’re not sure what you’re doing.
Once you’ve found a home you love, there are a few important things to do before you officially make an offer. If you were renting a place, you wouldn’t sign on the dotted line without seeing a lease abstract or knowing what you’re getting into. You should take home-buying even more seriously since it’s often a more permanent situation!
With that in mind, let’s go over five things you should do before making an official offer on a home.
Understand Your Needs and Preferences
Buying your first house is an exciting process. To avoid many mistakes, consider your needs, preferences, and budget, then look for homes that are a good match. Buying the wrong house can be very costly and stressful in terms of purchasing price and mortgage payments if you can’t afford the monthly payment after closing costs. If you don’t understand how much it will cost to live there with taxes and maintenance, it’s better to wait until you do.
Your credit report, debt-to-income ratio, and employment history are all factors your loan officer will use to determine if you can get the mortgage.
Another consideration is your preferences. If you prefer luxury real estate or neighborhoods with established economies, moving to a community that doesn’t match these expectations will force you to look for another option soon.
Don’t feel pressured to buy a house. When you’re ready, do your research and choose a property that meets all your needs.
Research the House and Neighborhood
You might fall in love when you look at a house online, or even when you do a walk-thru. But, digging in and doing extra research will help you to learn more about the property and the surrounding area.
First, research the house itself. When was it built? Has it gone through any upgrades or renovations? Is the price fair? You can find that out by looking at other houses for sale nearby.
It’s also a good idea to research the neighborhood since you’ll want to be an active part of your community. Look into area schools, doctors’ offices, how close stores and restaurants are, and the crime rate. You’ll want to make sure you’re comfortable actually living in the area because you won’t be cooped up in your home 24/7.
Learn the Utility Cost
One mistake new home buyers often make is not factoring in all of the costs associated with a house they’re interested in. You might have enough for the mortgage payment, but it’s important to factor in things like homeowners’ insurance, utilities, and any other monthly bills that you might receive after buying the house.
You should also take home maintenance fees into account. Whether the home you want to purchase is brand new or it has a history, things happen. Having an ‘emergency fund’ for unexpected maintenance costs will help to keep you out of debt or from having to take out a loan if a large project presents itself.
Get Your Financing in Order
As of 2017, only 28.8% of homes in the U.S. were purchased with cash. If you don’t have enough money to buy a house upfront, you’ll need to consider some kind of financing. The first step is making sure you have a good credit score. This will help you to get pre-approved by a lender, so you know how much money you can spend on a house. There’s no point in making an offer on a house you won’t receive enough financing for, so talk to local lenders and research interest rates to find the best option that fits your needs.
Talk to a Legal Expert
If you really want to be safe before you make an offer, it’s never a bad idea to talk to a real estate lawyer. They can help you to make sure your offer isn’t too high or too low, and they can break down your contract in simpler terms so everything is clear and concise. This can help to eliminate any confusion you might have before you sign your name to something.
Understand the Full Process
Once you finally do make an offer, understand that the home-buying process isn’t over. Your offer might get rejected, or the seller might come back with a counteroffer. Even if they do accept, it’s still only the beginning of the process. Be prepared to work with your lending company and mortgage company to go over the legalities of the sale. Buying a home comes with a lot of paperwork! It’s not necessarily a quick process, but if you’re willing to be patient and go about it the right way, it can be one of the most fulfilling decisions of your life.
Hopefully, these tips will help to keep you safe and aware as you go house-hunting for the first time. Don’t settle on the first home you fall in love with. Take your time throughout the whole process and think about where you could really see yourself living. Once you’re ready to make an offer, keep these helpful steps in mind.