19/06/2021
How to Buy Your First Home.
1- Determine If You Are Ready to Buy a Home.
Tip - If you're not sure you can afford a home, try sticking to a budget with what you expect your home payment will be and put the extra money in savings. This can build your confidence and your savings so you can move forward with the home purchase.
2- Start Shopping for a Loan.
Most people need a loan to make a home purchase. In many cases, it makes sense to get pre-approved for a mortgage before you begin shopping for a home. Your pre-approval can provide you with an idea of how much you can afford.
3- Find the Best Payment Options and Loan Types.
Some buyers choose a 15- or 20-year loan because the term is shorter and you might be able to lock in a low rate. On the other hand, the reason 30-year loans are so popular has to do with the fact that a longer-term usually means a lower monthly payment. You might have a slightly higher interest rate, but the payments are usually more manageable.
4- Adjustable-rate vs. fixed-rate mortgages.
With an adjustable-rate mortgage, you can expect to see your interest rate vary over time. The initial rate is lower, but you run the risk of seeing the rate rise as market conditions change—that means a higher monthly payment.
5- Have a Down Payment Ready.
Your down repayment can reduce what you owe, also reducing your costs. Realize, though, that if you put down less than 20% of the cost of your home, you could end up paying private mortgage insurance (PMI).
6- Be Honest About What You Can Afford.
You also need to determine how much home you can really afford. A good rule of thumb is to keep your mortgage, along with your taxes and insurance, between 25 and 30 percent of your income. Other experts advise that your home cost no more than two and a half times your annual salary. If you spend too much on your mortgage you may not be able to meet your daily obligations let alone save for retirement. A smaller house might be worth the peace of mind. If you are carrying debt (credit card or student loan debt), a smaller home payment can be an especially good idea.
7- Find a Good Real Estate Agent.
Once you have determined how much you can really spend and are pre-approved for a mortgage, look for a good real estate agent. Your real estate agent should listen to your wants and needs carefully. They may make recommendations or explain the market to help you find a home that suits your needs and that you can afford. Once you make an offer, your real estate agent should work to negotiate terms that you are happy with. They can also guide you through the paperwork and the process needed to successfully close. While you don't need 20% down to be successful in homeownership, it might be a good idea to consider the cost of PMI when you buy.
8- Request a Home Inspection.
Through the home inspection, you can learn about any issues that may prevent you from buying the home. This may include mold, termites, foundation problems, or a roof that needs to be replaced. The inspection can save you thousands in repairs later on.
9- Be Patient During Escrow.
Once you have bid on your home and the offer is accepted, you will go into escrow. The escrow holder will work to make sure that all the documents, money and other necessary information are properly prepared before you close. Escrow is set up to protect the buyer, the seller, and the lender. It can take time to complete escrow, depending on a number of factors. It's not uncommon for a closing date to be three to five weeks in the future.
10- Close and Move-In.
When the closing date arrives, you show up and sign the final papers. The escrow agent will release the funds to all appropriate parties. Once you have closed on your home, it is time to move in. You can paint, unpack and enjoy your new home. Be sure that you change your address with your bank, and other accounts. You can set up your utilities and cancel your old ones as well. This will save you time and money because you will avoid late fees. Some companies will waive installation fees if you transfer your old account to your new address.
