Buying a home may be the largest investment you’ll ever make. You want to get it right the first time. First Bank has you covered. We’ve compiled this helpful checklist for first-time home buyers:
1. Decide how much you can afford to pay for a home
The easiest way to do this may be to decide on a monthly payment that is comfortable for your budget. We say this because so many first-time homebuyers have an escrow account. That means a portion of your monthly payment is earmarked for property taxes and insurance, so you don’t have to pay them in a lump sum of several thousand dollars each year. Escrow is in addition to your loan principal and interest. Use the mortgage calculator on our website.
2. Research first-time homebuyer assistance programs
Many states and even some cities and counties offer first-time homebuyer programs. The programs often combine low-interest-rate mortgages with down payment assistance and closing costs. Sometimes you may even get tax credits. A First Bank Mortgage Loan Officer can help you with this step.
3. Get pre-qualified for a mortgage
While your loan officer is helping you find a first-time homebuyer assistance program, ask him or her to pre-qualify you for a mortgage loan and provide you a letter stating the amount of money you are pre-qualified to borrow. The letter shows real estate agents and sellers you are a serious buyer and could give you the edge if other buyers put an offer on the same house as you.
4. Choose a real estate agent
It’s time to start shopping! Choose a real estate agent. You should also shop online, but a real estate agent has access to more listings and will coordinate showings for you to walk through the homes that interest you. Ask your loan officer for references, as well as family and friends. Interview potential agents and get references. The right agent is critical to your buying process. By the way, even if you decide to build instead of buying an existing home, a real estate agent can help you find the right builder and neighborhood; it’s best practice to be represented by a licensed real estate agent regardless of transaction type.
5. Make an offer
Now it’s getting real. You’re close to owning your first home. Once you decide which home you love, direct your realtor to put in an offer. He or she should have the expertise to negotiate on your behalf for the best price possible. If your first offer isn’t accepted, don’t lose hope. That just means the right house is still out there waiting for you.
6. Have the home appraised and inspected
All lenders require an appraisal to ensure the home’s value is worth the amount of money you are borrowing to pay for it. If it isn’t, you may have to bring extra money to close on your loan. The inspection, though not required by your lender, is still a smart thing to do. In the event, the house has a serious problem, like foundation damage, termites, etc. Your realtor will negotiate with the seller on your behalf, either lowering the price of the home to cover the necessary repairs or asking the seller to fix the problems (prior to you closing on the home).
7. Make moving arrangements
If you want to move in on the day you close your loan, make arrangements ahead of time. These often include contacting the utility companies to have your water, electricity/gas, and cable/internet turned on before moving day. If you plan to use a moving company, schedule one in advance. Arrange for the post office to forward your mail to your new address. Your real estate agent should give you a comprehensive list.
8. Close on your loan
It’s closing time! This is the final hurrah…the day you become a homeowner for the first time (cue the confetti and balloons!). Your lender will tell you if you need to bring money to closing; this money covers the down payment if you have one, and closing costs to cover expenses like the appraisal, loan origination fees, insurance costs, etc. Closings costs typically range from 3% to 5% of your total loan amount (*this can fluctuate).
9. Move-In
Congratulations! You did it. You’re a homeowner. Now the hard (and fun) work begins – moving into your beautiful new home and determining where everything goes. That could take a day, a month, or even a year. Enjoy every minute.
10. Live happily ever after…
…and be sure to make lots of great memories.
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