National Homeownership Month: First-Time Homebuyer Checklist
With this map and Preferred Mutual by your side, there’s no way you can get lost in the early stages of buying a new house!
Are you ready to switch from renting to owning your own home? Or perhaps you’re interested in owning a vacation home or a condo! A first-time home buyer checklist can take some of the weight off of your shoulders! When you know what to expect in the process before you begin attending open houses and spending hours on real estate websites flipping through photos, you will be better prepared to make an offer when you find the home of your dreams.
Step 1: Find a real estate agent.
This is paramount. A mistake many first-time homebuyers make is beginning their search only by browsing listings. A real estate agent is no cost to you as a buyer, so you’re getting free advice by using one. Agents have access to a database of homes that are already publically on sale, as well as homes that may be going up for sale soon. They can also send you lists of houses meeting specific criteria, too; including neighborhoods, within a certain distance from work or schools, homes that include a two-car garage, and much more.
We suggest interviewing two or three agents before agreeing to work with one. Recommendations from family and friends can help, too, but make sure you are the one making the decision on who to work with.
Step 2: Talk to a mortgage lender.
Some experts may recommend doing this prior to finding a real estate agent, but there is a significant benefit to talking to an agent first – Agents work with local lenders all the time and they know which ones are trustworthy and which aren’t.
The goal of Step 2, though, is to get pre-approved for a home loan. This will help you and your real-estate agent focus on homes within your price range, as well as approximate what interest rate you’d be getting should you find a home! A good mortgage lender will also be able to help you understand which type of loan is right for you.
Be prepared to provide the lender with paperwork, including bank statements, pay stubs, W-2 forms, 1099 forms, and tax returns to start.
Step 3: Improve your credit, if needed.
In order to be pre-approved, the lender will pull your credit score. Based on poor, fair, good and best, your interest rate on your loan will be determined by that number. Your credit score is calculated based on a number of factors, including debt payment history, debt-to-income ratios, and length of credit history.
If you find that your credit score is subpar, you may need to postpone your house search for a few months in order to mend your credit. Just keep in mind that your score won’t improve overnight. However, it would certainly be worth taking time to fix if your interest rate would hurt what you can afford monthly. It is also important for you to keep or improve your credit if you’ve been pre-approved. Nothing is officially until you’re ready to close on the home!
Step 4: Determine where you want to live.
Now that you’re pre-approved and you have an agent on your side you trust, you can begin to really focus your hunt. Your agent can help find a neighborhood that meets your commuting needs, school requirements, proximity to family and friends, and overall lifestyle. If you have children, your agent can help to find neighborhoods with similarly aged children, or if you prefer to live on a quiet street, your agent can help you find your solo oasis.
Driving through neighborhoods during different times of the day and week can help give you an idea of how you might fit into it. For instance, driving by a house you are interested in during the weekday when most people are at work or running errands might be different than driving through on a Friday or Saturday night.
Step 5: Purchase the best insurance coverage that makes you feel right at home.
You did it! You found the home of your dreams and you’re almost ready to close! Before the keys are in your hand, most loan lenders require you to purchase a homeowners insurance policy before the lender will allow the closing to proceed. Otherwise, the loan won’t be finalized and funded — and nobody wants that.
A good homeowner’s policy will protect your property and possessions, provide living expenses in case of an emergency, and keeps you and your family safe from personal liability.
You can shop around, but you won’t find a better policy than with Preferred Mutual. Every one of our homeowner’s policies is customized to meet your needs and your budget! Now, that is living assured!
This information is intended for educational purposes only and is not legal advice and/or an authoritative guide.