Buying a home is one of the biggest and most important purchases you will ever make in your life. To help you get started we have created this quick guide! In this article, we’ll discuss mortgage rates and credit scores – two things that are really important when it comes time for house hunting. We’ll also talk about first-time home buyers who are looking to buy their first place. If you’re new to all of these terms, don’t worry! The whole point of our guide is to help you with some basics before getting into more complicated topics like debt ratio or down payment requirements.
What is the first step in the home buying process and the best way to get started?
The first step in the home buying process is taking a good look at your finances and figuring out what you can afford. You should also talk to people who have gone through this process before, such as mortgage brokers or real estate agents. Finding quality professionals that can assist you in the process will end up saving you time, money, and headache throughout the rest of this journey. Hint, hint, we can help walk you through this entire process from beginning to end!
Fix Your Credit
Make sure your credit score is high so you can get a lower rate on your mortgage. If you don’t know where to begin with credit scores or what a mortgage is, start with our free credit repair guide. Fixing your credit can be a complex process, but with the right tools and knowledge, anyone can increase their score in fairly a short amount of time. Check your credit score completely free.
This can be a much larger discussion if you are in need of help. Check out my complete guide to fixing your credit in 7 easy steps.
Consider how much you can afford for a down payment
The amount of deposit you need is determined by the down payment percentage. Generally, a 20% down payment will give you the best mortgage rates and terms. However, many lenders offer terms with anywhere from 0-3% down if your income and credit scores qualify you for those programs. Keep in mind that you will typically have to pay Private Mortgage Insurance (PMI) if you are putting anything less than the 20% down.
Consider, that if you do want to put 20% down, that means that for every $100k in the purchase price of your home, you’ll need $20k in cash. You will also need to have reserves for other expenses that come with the home purchase process, otherwise known as closing costs. This can include application fees, the appraisal, transfer fees, and the home inspection.
Compare Mortgage Lenders and Loan Types (Get Approved)
It’s always a good idea to do your research before choosing a mortgage lender or mortgage broker. There are many different types of loans, so it pays to have an understanding of the differences and how each one could impact you in the long-term. Lenders may also offer lower rates for borrowers with very high credit scores or who put more than 20% down on their home purchase. And keep in mind that some lenders will charge origination fees while others don’t – which can save you money.
Understand what type of mortgage program is right for you by considering these factors: Your credit score, financial situation, and needs/wants as well as whether there are specific programs offered through the government (such as Veterans Affairs). These factors will all help you understand what your total monthly mortgage payment will be.
The absolute best way to get started with your home search is by setting up a mortgage preapproval. This will allow you have an idea of what price points you can afford so that you can start looking for the right house and avoid wasting time on properties that are outside of your budget. You will also be in a better position to make an offer when the time is right.
Create your dream home wish list
If you’re just starting your search, it’s a good idea to make sure that you know what features are important to you. Here is a list of some things that can help narrow down where and how much house might be right for you:
- size (number of bedrooms)
- age/style of home
- exterior materials (siding, roofing)
- location within the city or town
- lot size – zoning requirements (for example, single family versus multiple dwellings on one property).
It may also be helpful to create an Excel spreadsheet with columns listing all these items so that they’ll stay organized in your mind when visiting different homes. And keep in mind there may be other factors that are important to you depending on your individual situation.
Begin to understand your local real estate market
With the internet, real estate statistics and listings are incredibly easy for anyone to view at their leisure. Take some time to understand your local market.
- What neighborhoods are the most popular?
- How much do homes in your chosen neighborhood typically cost?
- How long is the work commute to most jobs in your area from this location (using Google Maps)?
It’s a good idea, too, for first-time home buyers to take some time and visit open houses with real estate agents. This will give you an opportunity to see firsthand what different styles of homes there may be available as well as get a feel for various locations.
You may also want to read my Columbus Market Forecast, where I try to summarize what’s happening in the Columbus real estate market and what may happen over the next few years.
Check crime statistics and the sex offender registry
I’m surprised how many buyers do not pay attention to crime rates and the sex offender registry. I usually tell my clients to look at these statistics before buying, but it’s so hard because they are often not easy to find on a quick search online. Here a few local resources to the Central Ohio area that may be of assistance.
- City of Columbus crime statistics: [Link to the city website]
- Ohio sex offender registry: [Link to state website]
- Franklin County Sheriff’s Office (Columbus, OH): Jails and Courts | Sex Offenders Registry – Search for Registered Sex Offender by Name or Address. You can also find out if someone is on probation here. This would be helpful in determining whether you want a home near an ex-convict who might have violated his parole.
Related Tip: If you’re interested in buying a foreclosure, check with your bank about any recent cases where people were convicted of mortgage fraud and other crimes related to real estate transactions before signing anything finalizing the purchase.
Speak with your real estate professional about your next 5 steps
The first thing to do is figure out how much of your dream home you can afford. That will be the starting point for determining size, location within your town or city and lot size.
The next step in the process of buying a home is figuring out how much mortgage money you have available based on what’s left over after all other fixed living expenses (i.e., rent, utilities). To determine this number you’ll need to know which type of mortgage best suits your needs – fixed rate (< 100% LTV) or variable rate (>100% LTV), as well as an estimate of property taxes, and homeowners insurance. Some people also take into account potential maintenance costs.
The third step in the process is finding homes that meet your price range, need for square footage or other features you desire. Undoubtedly there will be things on your list that are non negotiable, its important for you to realize what those are and how realistic finding those items are in the areas you like.
The fourth step in the process is narrowing down your list to one or two homes, by asking yourself some questions. Some of these include: “Is it close enough to my work commute that I won’t get angry every morning?” and “Does each home have a room for guests?”. You can make an initial decision based on this criteria, then go back to your original list of must-haves so you don’t forget anything.
The last step is narrowing down the one that you want, and making a competitive offer with your agent. A good agent can help you make a contract more presentable to a home seller. They will also sometimes put in clauses that protect your interests.
After completing this five-step process, congratulations! You’re well on your way to finding the perfect house for you and/or family that meets all your needs (and at a price point you are comfortable with).
Now there are just a few things left to complete the process.
Hire a qualified and reputable Home Inspector
Home Inspectors are professionals who perform a thorough inspection of the home and property to find any existing issues. A qualified inspector will also provide you with an objective opinion on whether the house material defects that could be incredibly expensive to repair. It’s important to note that this isn’t just for people trying to purchase their first homes, but for anyone looking at making a major investment in real estate.
Look for someone who has good reviews from other clients .
Tip 1: A Home Inspector can cost anywhere between $350 and $700 depending on the location, how long it takes them to inspect your home and what level of detail is necessary in order assess any potential problems with the property or its systems. This might sound like a lot, but considering the average cost of repairs – which can be fairly high – its actually a small investment.
Some of the most common problems an inspector might find are items such as:
- Termite damage to wood and insulation in walls
- Leaks that can lead to mold growth on floors or ceilings, which will need professional treatment .
- Roofing issues or gutter installation problems that could cause water to leak into the house
- Leaks in pipes, water heaters or dishwashers that can waste a lot of water and lead to big bills
- More serious issues such as drywall cracks, roof leaks or damp areas on your property where there should not be any moisture at all.
Tip 2: If you are going with an FHA mortgage loan, it’s important to note that if the home inspector finds some expensive repairs needed for approval, this might result in disqualification from getting approved. This varies by lender but is something worth looking into before choosing which type of mortgage option to go with.
Consider the benefits of hiring an attorney
In many states a real estate attorney is required when purchasing a home. At this time, Ohio is NOT one of those states. However, there may still be some practical reasons to consider hiring one, such as:
– A professional real estate attorney will be able to provide you with advice on your risks associated with the real estate purchase
– You’ll have some protection against any potential dangers that could arise when going through this process by having someone knowledgeable who can represent you in court if need be. This ensures you know exactly what’s going on during all phases of buying your first house!
– It saves time – it could save days or weeks worth of time spent researching things over and over again yourself, which also means less stress for you! The last thing anyone needs while trying to purchase their dream home is more stress than necessary. Who knew finding “the one” could be so stressful?
– It’s a lot more affordable than you may think. A real estate attorney can give you their best guess for how much this service might cost, but it usually averages at or below $1000-$3000 depending on the duration of your contract and other factors such as whether there is any litigation in connection to the matter. Keep in mind that this doesn’t include legal fees if they’re required during a course of action – only initial consultation time with an attorney.
– Often times, they’ll also provide assistance with other matters related to house ownership like resolving disputes between tenants or getting someone evicted from your property . They are able to do all these things because they have years worth of experience! You won
Attend your real estate closing
The closing is the final step, and it’s when you’ll have to make sure that everything makes sense in terms of the expenses on your closing documents. Your real estate agent and mortgage lender should be able to assist you in understanding the taxes and fees that will be incurred (your closing costs). Your title company should provide a checklist for what documents and information is needed for closing (be sure to bring a valid photo ID for example).
Move into your new home!
Congratulations on your new home! Now it’s time to fill the rooms with furniture and memories. One of the great things about buying a house is having space for all of these items that are so meaningful to you.
Don’t forget to celebrate, this is a huge milestone in your life!