Getting pre-approved for a mortgage is a great first step. This will help you determine your budget and avoid falling in love with a home you can’t afford.
Simental advises looking into local, state, and federal programs that can help first-time homebuyers with a down payment or closing costs. These are often paired with a Fannie Mae or Freddie Mac mortgage, offering low-rate or forgivable loans.
Get Pre-Approved for a Mortgage
Getting pre-approved for a mortgage is an essential first step in home buying. It lets you know your price range and save time looking at homes outside your budget. It also speeds up the loan closing process by putting you in a better bargaining position with sellers.
Lenders determine what you qualify to borrow based on your income, assets, and debts. But you have the final say about how much you are comfortable paying upfront and monthly.
The mortgage preapproval process also uncovers issues that could prevent you from obtaining the loan and allows you to correct those before you waste time shopping. Online calculators and advice columns can only tell you what you think you qualify to borrow – not what you will be approved for.
Find a Realtor
Many first-time homebuyers start their house hunting by paging through online listings, calling up any property that looks like a good fit, and then scheduling tours. However, according to the National Association of Realtors (NAR), hiring a full-time real estate agent is one of the best ways to ensure a smoother home-buying process.
Experienced agents like the Wayzata Realtors know their market and can advise buyers on the best neighborhood for their lifestyle and budget, such as schools, shops, and commute times. They also connect with industry professionals, such as mortgage brokers, attorneys, and home inspectors. That can help expedite the transaction and cut down on costs. Also, the right agent will help negotiate a deal on your behalf. Having this expertise is especially critical in today’s competitive housing market.
Focus on Your Needs vs. Your Wants
The first thing you must decide when buying a home is how much you can afford. Working with a lender to get preapproval is always wise if you need clarification. This way, you are only looking at homes within your price range.
Once you have established your budget, it is time to identify your needs and wants. You can only do with a need in your new home, like a kitchen that can fit all of your appliances or a primary suite with a Jacuzzi.
A want would be nice but optional for your lifestyle. For example, you may be willing to live in a rural neighborhood for extra space, but not if it means living far from a restaurant or a culture hub.
Invest in a Home Inspection
Home inspections are a critical component of the buying process. They provide unbiased documentation about a home’s condition and help you understand the nuances of what could be one of the largest purchases of your life.
For example, a home inspector can tell you if a home has a lot of windows that stick when opening or closing or if the roof is leaking. They can also tell you if renovations have been done without the proper permits, which could impact insurance costs and taxes.
A home inspector can give you an idea of what it will take to keep a home in good shape down the road, which can be helpful for budgeting purposes. Waiving a home inspection is never a good idea, even in a hot real estate market.
Make an Offer
When you’ve found the home of your dreams, it’s time to make an offer! This is a big step, and you will want to be confident in your decision. Consider additional costs, like homeowners insurance and closing costs. In a competitive real estate market, making an attractive offer is essential. Marketing allows realtors to showcase a property’s unique features and selling points, giving their offer a competitive edge; check out the article on Real Estate Marketing: B2B Results To Attract Minnesota Buyers for more information.
Your Realtor will be able to walk you through this process and help you determine what the fair price is for the home you are interested in buying. This may be the asking price, or it could be higher or lower.
Your offer should include:
- The address and legal description of the property.
- A description of any additional fees or requirements.
- Your earnest money deposit.
- Contingencies (which your Realtor can discuss with you).
In a red-hot market, it is important to understand how to negotiate and avoid a bidding war.