One of the most exciting processes of life is the pursuit of buying your first home. While the thought of taking out that big of a loan can be a little intimidating, the rewards that come with owning a home far outweigh any concerns. However, that statement is only true if you follow the proper steps to homeownership.
As a first-time homeowner, how are you supposed to know what to do? That’s where we come in.
Vital Steps to Homeownership
Did you know that over 647,000 homes go under foreclosure each year? This only represents a small percentage of homes in the U.S., but it doesn’t mean it can’t happen to you. Most people in our country live paycheck to paycheck and one small financial blunder can send everything into a tailspin.
To avoid future problems (financial or otherwise), keep reading for the top 10 steps to homeownership to protect yourself now and in the future.
1. Get Your Finances in Order and Consider ALL the Costs
One of the most important tips for buying a house is ensuring you’re 100 percent financially prepared. This is where many first-time homeowners fall flat on their face.
Buying a home has several costs outside of the home’s price tag. Additionally, there are many expenses of homeownership you may not have considered. Between buying a home and being a homeowner, here are all the costs you need to be aware of:
When preparing your finances, make sure you can afford all the costs of homeownership. As you can see, you need to adjust your budget for much more than monthly mortgage payments.
2. Save for a Downpayment
Another one of the most important steps to homeownership is saving for a downpayment. However, the size of the downpayment required depends on the type of loan you get and what you want your rate to be.
For example, if you’re a veteran or otherwise qualify for a VA loan, you can get a mortgage with zero money down and still obtain a relatively low-interest rate based on your credit score. Alternatively, FHA loans require a minimum of 3.5 percent down, and conventional loans typically ask for 20 percent upfront.
3. Get Preapproved for a Home Loan
Before you can start househunting you need to know what you can currently qualify for in terms of loans. This is an important step to homeownership because it keeps buyers from getting emotionally attached to homes outside of their budget. By getting preapproved, you know exactly what homes are in your price range.
However, if you’re dissatisfied with your approval amount, you can take a few months to work on your credit score. After boosting your score, you can come back and get approved for more.
4. Hire a Realtor
Hiring a real estate agent is also a good idea for first time home buyers. They know all the ins and outs of the real estate process. They have vital insight into fair prices, good neighborhoods, school districts, and negotiation tactics that could help you get a better deal.
They’ll also be helpful to have on hand while going on home tours to point out any potential issues, highlights, or negotiation leverage points.
5. Start House Hunting
Now comes the best part of the process of buying a house and the home tours.
Working with your realtor and your budget, create a list of priorities that your ideal home would meet. This could include everything from individual features, total size, number of rooms and bathrooms, location, school district, and more.
Understand that you’ll likely need to compromise on some parts of your list. Just make sure you know what’s most important.
6. Take It Slow
Although it may be difficult not to get emotionally invested in the homes you’re touring, it’s important to take your time and make sure you’re aware of all your options.
If a great home has a lot of interest, it may be best to throw your hat into the ring sooner rather than later. In these situations, refer to your realtor’s expertise.
7. Make an Offer
Based on the condition of the home, your budget, and buyer-interest in the house, when it comes time to make an offer, it’s good to start low.
However, don’t low-ball the seller so badly that they don’t take your offer seriously. Additionally, if there’s a lot of interest in the house, too low of an offer will be cast aside for a higher one.
8. Hire a Home Inspector
Once a seller accepts your offer, one of the next steps to homeownership is hiring a home inspection service to examine the home.
The inspector will be primarily concerned with the condition of the house. Their job is to make sure both the seller and the buyer are fully aware of any preexisting damages or other issues.
Here’s an idea of what they’ll be looking at:
9. Negotiate and Come to an Agreement With the Sellers
Negotiation is one of the most important steps to homeownership, especially after you get the results of the home inspection back. If there are any issues brought to light, you have a number of options.
First, you can request the seller addresses the issues before finalizing the contract. You can also negotiate the price down if you don’t want them to fix anything and the issues don’t compromise your loan eligibility.
10. Find the Right Financing
Lastly, once you and the seller come to an agreement, it’s time to get financed. Remember, you don’t have to use the lender or agency with whom you got preapproved. In fact, it may not be a bad idea to shop around for the best rates.
There are even some lenders who have special offers for people in specific fields, such as military, police, nurses, doctors, and more. You can find more information here for loans specific to nurses.
Looking for More Important Advice or Information?
Learning the necessary steps to homeownership is vital for growing up and becoming an adult. You’ll find that as you grow up, things only continue to get more complicated. Each time you knock one item off your list, five more come up.
Be sure to check out some of our other articles to help you navigate the many complications and processes of life. We have information and advice on everything from home improvement projects to business development.