Buying your first home is a lot like any other first—a mix of heart-pounding excitement, anxiety and anticipation! If you’re unfamiliar with the process of buying a home, it can quickly begin to feel overwhelming.
Even if you’re just beginning to think about searching for a home, something that can ease your mind is knowing what questions to ask before you purchase your first home. Some of these are questions you should ask yourself and your family, and some of these will arise as you deal with your lending agent or realtor. Whether you’re looking for a home in which to settle down and raise a family or beginning your real estate journey, utilize these helpful questions to guide you through the home-buying process.
1.) What Do You Have in Savings?
Before you begin your home-buying journey, it’s crucial to assess your finances. Your finances are the foundation that will support (and determine) every step of the buying process. You’ll first want to look at your savings. Not only will you need to save for your home’s down payment (which can be between 3.5%–20% of your home’s purchase price) and closing costs, but you’ll also want to have enough emergency savings that account for 3–6 months of your living expenses. And when it comes to saving, review your already existing expenses so you can have a sense of how much you can afford for a mortgage payment. This includes everything from car payments and utilities to weekly food costs, student debt payments, retirement savings, and more.
2.) What Is Your Credit Score?
Check your credit score, and if it is low, put in the work to get your score up. When you are ready to talk to lenders, they will look beyond just the credit score number—they will look at your credit habits as well. Focus on paying your bills on time, keeping your credit balances low, and keeping your current credit cards open. All of these habits will improve your credit score and heighten your credibility.
3.) What Kind of Mortgage is Right for You?
Before placing an offer on a home, you need to be pre-approved by your lender. A pre-approval letter signifies that you are a serious buyer and that you qualify to be financed through loans. To qualify for a mortgage loan, lenders have to be able to determine that you can pay off the loan within an appropriate time frame. Certain mortgage types are suited for particular financial situations. To determine what kind of mortgage is suitable for your situation, lenders will look at factors like your debt, monthly income, your job history/longevity, and your credit score. Compare the interest rates and fees of various lenders to find a mortgage plan that is right for you.
Want some great news? As a first-time homebuyer, you are at a unique advantage when it comes to loans. If you are unable to provide the minimum down payment on your home, you can have access to federally backed loans, state programs, and tax breaks. Discuss these options with your local lender.
Another tip: When you’re searching for a reputable lender, your real estate agent can provide you with great options in your area. A local lender & loan office that we use in the Fredericksburg area and surrounding region is Movement Mortgage. See Question #7 for more details on how your real estate agent can assist you in the home-buying process.
4.) What Is Your Buying Budget?
Just like with any other large purchase, you’ll want to set a budget. While your pre-approval letter may signify that you can afford a certain home, there are additional home-related costs to prepare for in your budget. When compiling your budget, look at property taxes in the given neighborhood, the cost of homeowner’s insurance, any home improvement costs, and closing costs.
5.) What Style of House Suits You?
As you begin house hunting, you’ll find there are many property types and home styles. You’ll encounter townhouses, condominiums, duplexes, single-family homes, multi-family homes, and more. There is no right or wrong option; it all just depends on what you and your family need and are looking for. If you would like to save money, fixer-uppers are a great option to consider.
6.) What Features Are On Your Wish List?
Who doesn’t love a wish list? Yours should include features like ideal layouts and appliances, as well as the desired property size and the type of neighborhood/community in which you are looking to live. How can you ensure that you are seeing all the properties that tick the boxes on your wish list? Listing sites like Coldwell Banker make it easier than ever to see all the properties for sale in your local area. You can house-hunt from the comfort of your home, honing in on ideal features and price points with the click of a button.
Another invaluable resource when it comes to house hunting is your real estate agent. Agents do a lot more than help you look at homes. Keep reading to see how your real estate agent will be your chief asset in the home-buying process.
7.) Who Will Help You Navigate This Journey from Start to Finish?
As a first-time homebuyer, you aren’t expected to know everything. That’s where your real estate agent comes in! Agents are experts on the conditions of your local market as well as the homebuying process. Every step of the process is a step in which they can offer you expertise and guidance, and often, direct involvement.
Some major steps that your agent will be involved with are (but not limited to): helping you search for homes that meet your specific needs and wants, finding you a reputable lender, helping you obtain a loan, negotiating your price offer with your seller, and completing paperwork.
When working with your real estate agent, open communication is a must on both ends. One tell-tale sign of a good agent is their ability to listen to you and communicate openly. Ongoing, open communication ensures that you and your agent are on the same page every step of the process—which is how it’s supposed to be!
When you’re ready to start your first home-buying journey, our team can help! We’ve been helping families buy the homes of their dreams for over 40 years, and we would love to help you achieve your dream home! Get in touch with us to get started today!