Buying your first home is an exciting yet likely overwhelming time in your life. As you probably are not very familiar with the home buying process, this overview will tell you what you can expect to happen before you get the keys to your new house.
Before you start shopping for a home, you should get pre-approved for a mortgage. To make sure you qualify -- and get the best rate possible -- start by ordering copies of your credit reports and credit scores, as these reports will be used by lenders to decide if you are a good risk.
Take care of any mistakes you notice on your reports and do your best to clear up any red flags, including high credit card debt, unpaid collections accounts and late payments.
To get pre-approved, you will need to gather documentation to prove you are capable of paying the mortgage. You will likely need at least 2 years of W2 statements, tax returns, bank statements, recent pay stubs and proof of any investment income.
Once you are pre-approved for a loan, you will have an advantage over buyers who are not. Sellers do not want to enter a time-intensive real estate transaction with someone who may not even qualify to buy the home!
Once your financial situation looks good, it's time to hire a real estate agent to help you find a home. This is not a strict necessity, of course, but having an agent will save you a lot of time and stress. Hiring your own agent means there will be a professional who has your best interests at heart, rather than relying on a seller's agent, who looks out for his or her client. Your agent will also know of many new listings that come up before they hit the market, and help you preview homes or point out pitfalls, such as overpriced listings.
Finding the right home is not always easy, and some buyers end up looking at hundreds of homes before they find the right one. Try to keep your home viewing schedule to a minimum to avoid getting overwhelmed and losing your bearings.
If you are like most buyers, you will want to do a lot of research online before you even start looking at homes in person. The average buyer spends 6-8 weeks trying to determine where they want to live, and most end up buying a home after 2 or 3 home tours once they find the neighborhood they like.
Now comes the stressful part for many first time buyers: making an offer and awaiting the response. This is where an agent can really help, so you can avoid the mistake of comparing the sales price to other homes you have seen. After all, sellers can price their home any way the like, but that is no guarantee it will sell at that price.
Your agent can give you comparable sales to look at, and help you examine pending sales. Comparable sales are similar homes in the same area and condition that have sold within the last three months.
If you are in a seller's market, you may need to pay more than list price, especially if there are other buyers interested in the property. Your agent will help you by giving a reasonable price range and help you keep your expectations grounded.
In some areas, home inspections are conducted before buyers even make an offer. In most areas, though, a home inspection is a contract contingency, which gives you the right to cancel the contract if you are unsatisfied with the results. After all, you may not want to continue with a sale if you find out the home has serious foundation issues.
Keep in mind sellers are not required to make most repairs if issues are discovered during the inspection. Think of a home inspection as conducted for your education. Still, most sellers will agree to requested repairs to avoid blowing the sale.