Buying your first home is an exciting and meaningful achievement, but it can also feel overwhelming at times. The best way to ease that stress is to be prepared and remind yourself to have patience throughout the process. To help, here’s a step-by-step breakdown of what you can expect along the way.
Finances
Before you start looking at listings, it’s important to take a close look at your finances. Saving for a down payment is one of the biggest steps, but it’s not the only one. You’ll also need to maintain a strong credit score. For the down payment, most first-time homebuyers should plan to save anywhere from 3% to 20% of the purchase price, depending on the loan program available. On top of that, don’t forget to budget for insurance, property taxes, and ongoing maintenance costs, all of which will be part of your monthly housing expenses along with your mortgage payment.
Pre-Qualify
Getting a pre-qualification letter is a smart step before you start shopping for a home. Not only does it show sellers that you’re a serious buyer, but it also gives you a clear picture of how much you can afford. A great place to start is with your credit union, where you already have an established relationship and they understand your financial history. This can often make the process smoother and more personalized, giving you peace of mind as you begin the home search.
Real Estate Agent and House Hunting
When it comes to finding a real estate agent, start local. Working with someone who knows the areas well can make a big difference in your home search. If you’re not sure where to begin, ask friends and family for recommendations, they can often point you toward someone they’ve had a positive experience with. Once you’ve found an agent you trust, it’s time for the fun part. Start by making a list of your must-haves versus wants. Consider things like location, number of bedrooms, commute times, and school districts (if needed). While it’s easy to get caught up in the excitement of seeing new homes, try to stay realistic about your budget and long-term needs.
Making an Offer
When you have found the right home, your agent will help you prepare an offer. This step includes deciding on a purchase price, any contingencies (such as finances or inspections), and the timeline for closing. Be prepared for negotiations, sellers may counter your offer, and you may need to adjust terms. Having your pre-qualify letter ready at this stage can strengthen your position and show you’re ready to move forward quickly.
Home Inspection and Appraisal
After your offer is accepted, you’ll schedule a home inspection and appraisal. This inspection could help uncover any hidden issues, such as possible roof repairs, plumbing problems, or structural concerns. If something significant comes up, you may be able to negotiate repairs or a lower price. It is in your best intertest to NOT skip the inspection, no matter how old or new the house is. The appraisal, on the other hand, confirms that the home’s value for your lender. This step ensures you’re not paying over value and protects both you and the lender.
Finalizing Your Loan and Closing Day
Once the inspection and appraisal are complete, it’s time to finalize your loan. Your lender will review your documents (tax returns, proof of employment, etc.), confirm the loan details, and provide a closing disclosure that outlines your payments and costs – be sure to review them carefully. Then comes closing day, when you’ll sign the final paperwork, pay closing cost, and officially receive the keys. Just like that, you’ve reached the finish line and can proudly call yourself a homeowner.
As always, if you have questions or want to learn more about a financial topic, email media@alltrustcu.com.