Step 1 - Financials
Unless you are purchasing with cash, the mortgage is going to be the most important part of your home buying process. The first thing you need to do is get an idea of you monthly budget and your down payment. Always talk to a lender before you start looking at homes so that you can be sure you know how much home you can actually afford. When it comes to buying a home, you have to remember that your mortgage payment isn't just going be how much you purchase the house for, minus the down payment. You need to make sure you are budgeting in for property taxes, homeowners insurance, mortgage insurance(if it is required) and any HOA fees. These can add up and take your once seemingly manageable monthly payment out of your comfort zone.
Figuring out your down payment is fairly easy. How much cash can you part with right now while still maintaining a comfortable enough cushion? Don't forgot to budget in for closing costs as well. While you can negotiate with the seller to pay a portion of your closing costs, you will usually be paying between 2-5% of the purchase price of the home. Your lender will give you a Good Faith Estimate once you apply for the loan which will give you an idea of what your costs will be.
Once you have a good idea of your down payment, monthly mortgage payment and closing costs, you will need to also figure in for operating costs. How much does the home cost to run each month? Gas, electric, water/sewer, telephone, cable, internet, etc. These are things that home buyers sometimes forget about. You can get copies of utility bills from the sellers so you can have an idea of what those figure will be. Don't forget to budget in for potential repairs as well. Odds are good that something will break or need repair within the first few years, so make sure you have some cash stashed away just in case.
Having a good Realtor who has your best interest in mind will make things a lot less stressful and intimidating. Most people will be able to tell pretty quickly whether an agent is giving off “good person” vibes or “sleazy salesman” vibes. Always try to get referrals from friends or family, but don't feel obligated to use a Realtor just because they are a friend of a friend. Treat it like a job interview, ask about their qualifications, sales history and their approach to real estate. You will want an experienced agent that knows what they are doing, but also is going to be patient and answer all of your questions and who is going to explain the real estate process, contracts, and details that you need to know in order to make the purchase go smoothly. You will be spending a lot of time with them, so make sure that their personality and style mesh well with you. Likable agents make the process so much more enjoyable. Make sure you have someone who is going to answer the phone or return calls, texts and emails quickly, as communication is key in this business.
So you've got your finances in order and a good Realtor in your corner, we are one step closer to the fun part!
Before you head out to look at houses, you need to make sure you know what you are looking for. Are you looking for a move in ready home, or something you can put some sweat equity into and make your own? With your agent, compile a "Needs & Wants" list. This is exactly what it sounds like. What are your must haves in a home? What are features you can live without, but would prefer to have? Do you have one specific location or area you are looking in, or are you open to suggestions? You may need to make choices between that extra bedroom or being able to walk to shopping and restaurants. If you have a plan of action before you start, it will help make the whole process easier. Once you help your Realtor understand exactly what you are looking for, then the real fun begins and you can starting viewing properties.
So let's double check; you have your finances in order, an awesome Realtor by your side and your "Needs & Wants" list in hand so you know what you are looking for. Let's get out there and find your home!
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