Today is the day.
You decided to buy your first home.
It is time to hop in the car and start looking at "for sale" signs and making calls.
You are excited and you want to make this happen.
Wait...
Buying your first house starts out exciting, but simply jumping into the process without
a plan will not only give you anxiety and frustration, it can lead to very costly mistakes.
In the next few minutes, we will outline 12 steps for buying your first home.
As important as the steps, is the order in which they are executed.
This step-by-step process will save time, minimize stress, and increase your chances
of getting the best house for your money.
In this video, we will summarize each step.
In subsequent videos from the Home Buyer Channel, we will cover each of them in more detail.
The first step is to make sure your credit rating is in good order.
A low credit score can make financing more expensive or even prevent you from getting
a home loan.
Get a copy of your credit report, make corrections if necessary, and do whatever you must to
get your rating as high as possible before you do anything else.
The second step is to get an idea of how much house you can buy.
There is no sense in falling in love with a house you cannot afford.
According to Freddie Mac, a quick initial estimate can be determined by multiplying
your gross annual household income by 2.5.
But this calculation does not fully consider your expenses or your existing debt.
The best way to factor these in is by calculating your debt to income ratio.
Eventually, your mortgage lender will do this for you, but you can get a head start by doing
the calculation yourself.
The next step is finding a mortgage professional and getting pre-approved for a loan.
Many new homebuyers want to skip this step and go directly to looking at houses.
But do not.
There are several good reasons for getting a loan pre-approval.
First, the size of your loan pre-approval determines which houses are in your price
range.
Second, loan pre-approval makes you a desirable buyer.
This is especially important if you end up competing with other buyers for a particular
house.
There are several different places to begin looking at mortgage loans.
You can go directly to a lender, such as bank.
Or you can use a mortgage broker, who will work as your agent to help you find a lender
who best meets your needs.
There are also mortgage marketplaces where you can compare different lenders.
Now that you know the price of the house you can afford, you are ready to choose a real
estate agent.
This could be one of your most important decisions.
A good agent will be a trusted guide through the rest of the process.
Finally, with your loan pre-approval and a trusted agent, you are ready to look at homes.
Do not be surprised if this process takes months.
But be ready to move quickly if a promising house suddenly appears on the market.
When you find the house you want, it is time to make an offer.
Though it is common to offer slightly less than the list price, remember that every local
market and seller is different, and that in some cases you will be competing with other
buyers.
In most cases, you should expect a counter-offer and be ready to negotiate.
Keep a cool head and look at the big picture.
This is the time when a good agent can prove to be invaluable.
Once the deal is acceptable to both parties, the offer is accepted and a closing date is
set.
It typically takes 30 to 60 days to close.
Soon after the offer has been accepted, a home inspection should be performed.
This cost is normally paid by you, the buyer.
Get this inspection done as soon as possible to allow time for repairs and renegotiation.
In most cases, even the most pristine houses will have something that comes up during inspection
that needs to be repaired.
Unfortunately, this is when things can become needlessly contentious.
Do not get hung up on the many small items that can show up on an inspection report.
Instead, focus on the big items that could be costly to fix.
Before closing, you will need to get homeowners insurance.
In many cases, you can get an overall discount if you purchase your homeowners and car insurance
from the same company.
The final step is the closing.
As daunting as this may seem, your agent will guide you through the process.
They have been through it many times before.
Now that you know the 12 steps to buying your first home, you are ready to set out on your
journey.
Subscribe to the Home Buyer Channel so you can learn in detail the most important aspects
of each step.
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Use the comment section to let us know what you think of this video and what other types
of home buying topics you would like to see in the future.