How to become a new homeowner

How To Become a New Homeowner

Have you been thinking that it’s time to buy a house? If you’ve never bought one before, the entire process can seem daunting, and if you don’t have some solid advice, you could make some costly mistakes along the way. 

Below, we’ve compiled a list of things to think about before you sign a purchasing contract, enabling you to become a new homeowner without making expensive errors.

What to Do Before You Start House Hunting

Before you even start looking for a house, you have a lot of homework to do. Without a massive bank account where you can pay the full price for your dream house with cash, you’ll need a mortgage and a down payment. 

Your Budget

The most critical first step is determining your budget. This involves more than how much you can afford for a mortgage payment. You’ll also have to consider property taxes, insurance, utilities, other expenses, and upkeep. 

Create a checklist of needs vs. wants. For instance, maybe you need a three-bedroom house with two full bathrooms because you have two kids, or perhaps you need a single-story home because stairs are difficult for you or someone in your family. But do you also need a fireplace, or can you go without it? 

This list will help you sort the wheat from the chaff, so to speak, and narrow your search down to houses that are practical for you before you get going.

Also, make a list of all your current income, assets, and debts to start drawing your financial picture. Online mortgage calculators are great, but you’ll need this on hand to help you determine what you can really afford. 

Pre-Qualifying For Loans

One way to learn just how much house you can afford is to get pre-qualified for loans. You might qualify for more than you’re comfortable borrowing, but that’s okay. You’re just getting an estimate of how much you can borrow, so you have a jumping-off point to determine your price range.

Keep in mind that pre-qualifying is different from pre-approval. Pre-approval includes an offer to lend you a certain amount of money that’s good for up to 90 days and involves income verification and hard credit checks.

You can get pre-qualified online, but you’ll need to meet with lenders for pre-approval.

Pay Attention To Your Finances!

From the moment you decide it’s time to become a new homeowner, you should start watching your finances carefully. Check your credit reports to ensure they’re accurate and know what you should start working on to bring your score up as soon as possible.

Be extra careful about paying your bills on time, too. 

Start Saving For Your Down Payment

Unless you can get a VA or USDA loan, you will need a down payment. If you don’t have much saved up, start looking at your monthly finances to see where you can save some money. The more you can save, the better your financial position will be when it’s time to sign the purchase contract.

First-Time Homebuyer and Down Payment Assistance Programs

Of course, saving money is more complicated than it sounds, especially for a down payment on a house. Fortunately, since you’re a first-time homebuyer, you have some programs available to you that can help with down payments and mortgages, like:

Keep in mind some of these programs are only available to people in certain professions. There are also state-level programs and grants for which you might qualify. When you start working on pre-qualifying, talk to potential lenders about these and other programs. 

Becoming a New Homeowner

Now that you’ve got your financial house as much in order as possible, it’s time to start the exciting part of becoming a new homeowner: Finding your new house.

Start Contacting Real-Estate Agents

You can house-hunt by yourself, but one of the best things you can do is find a good real estate agent. They know their territory, and they know what they’re doing. Their advice is often invaluable. 

Ways Real Estate Agents Help You

Believe it or not, real estate agents are one of the greatest hacks in home buying. They don’t just take you around to look at houses. They also do the following:

  • Price research
  • Find homes up for sale in your target area and price range
  • Connect you with lenders, home inspectors, and more
  • Provide access to homes
  • Serve as a fount of information about each home they show, as well as the area each home is in (schools, crime rates, whether the area’s in transition, etc.)
  • Negotiate contracts on your behalf

Finding the Right Home for You

Now’s the time to pull out your needs vs. wants checklist. Your agent can help narrow your search down to homes that meet your needs and as many wants as you can afford based on your financial information. 

But how do you know which house is the right one for you?

  • It meets most, if not all, of the needs on your checklist.
  • It’s not at the tip-top of your price range.
  • You can easily picture yourself and your things in it.
  • You’re eager to tell people about the awesome house you found.
  • You can see how you’re going to fix it up after you close.

A truly outstanding real estate agent not only points out all the great features of a house but will also tell you about problems they know of or can spot and will give you advice on how to proceed. In short, a great agent can get you excited about a house without being dishonest.

And the best part is, when all is said and done, you’re in a house that’s as close to perfect as possible for you.

Final Thoughts

If you’re thinking about becoming a new homebuyer, you have a lot to consider and do, but things don’t have to be intimidating. When you know what you have to do and the order in which you have to do it, your home buying experience can be a great and memorable one rather than one fraught with tension.

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