Tips for Buying Your First Home
Information You Should Consider Before Signing on the Dotted Line
Buying your first home counts as one of the most exciting endeavors that you will ever undertake. There are some concrete steps for buying a house that you should take so that your transaction goes more smoothly. These will also reduce at least some of the stress and potential surprises that come with this process.
Step 1: Write Out a Budget
Many people dislike writing budgets, but for the first-time home owner, they are a must. You need to know how much you can afford and more specifically, what kind of house payment that you could realistically pay each month.
Step 2: Look for a Good Lender
Before you move onto Step 3, you’ll want to familiarize yourself with some lenders who are familiar with IHFA loans. In this step, I’ve included some helpful links for lenders who specialize in this type of home loan, which I explain in more detail in Step 3.
Step 3: Get Pre-Approved for a Mortgage
When you’re in the process of buying your first home, getting pre-approval for your home loan is the second step and one you should only take after you do your budget. This is related to your monthly expenses, and here’s why. You’ll want to visit with a lender, who knows about Idaho Housing Loans, called IHFA loans.
Many times, these loans give first-time home buyers like you much better — read lower — interest rates. They also usually require less of a down payment.
From there, you should request a “good faith estimate” from your lender of choice. In a nutshell, what this gives you is a reasonable idea of what costs you’ll encounter with the loan and how much you can expect your down payment to be. This counts as one of the most important first steps in buying your first home.
If you’re worried about being stuck with this lender, don’t be. Although this lender may be the person who pre-approves you for the loan, you don’t have to use the same professional for your final loan.
Step 4: Find the Right Realtor for You
Some first-time home buyers may be wary of finding a realtor. I mean, everyone wants a good realtor, but how do you determine who fits this criteria for you?
Just remember that most real estate professionals work with you for free, meaning that you as the home buyer won’t be expected to pay any Realtor’s commissions. What happens instead is that the seller pays the commission for both the listing agnet and buyer’s agent. Working with a Realtor can cut down on many of the headaches that naturally go with buying a home and can help you negotiate the best deal.
That said, never work with any real estate professional, who wants you to make decisions quicker than you feel comfortable doing or gives you the impression that it isn’t OK for you to ask questions about the purchase of your new home.
Step 5: Ask Yourself What Type of Neighborhood or Location You’d Like to Live In
Out of all the steps for buying a house that you need to take, this one may seem the most obvious, but this is deceptive. While your budget may determine that you can more comfortably live in Meridian than you can in the North End, there may be hidden expenses and issues in your budget that will mitigate some of these costs.
For example, that house in West Boise may be cheaper at the outset, but living there may require that you drive 30 minutes each way during your commute to and from work. With the lost time and money in gas, you might find that the home in the neighborhood you want or one like it in a similar location is a better fit for you.
The solution to this is to ask your Realtor to give you the tour so to speak. You want to make a list of your priorities in terms of location to work, preferred neighborhood, work proximity, etc.
Step 6: What Type of Home Would You Like to Buy?
As you go through the process of buying your first home, one of the things you’ll probably decide on very early on in the process is what kind of house you’d like to own. This image was probably the first thing in your head even before you started your budget or talking to a Realtor. This is the step that allows you to really look at that in earnest.
So now, dream a little. How many bathrooms will your family need? How many bedrooms? Will one of them become your office? Do you want a one or two-story home? Now, ask yourself and your Realtor, could any of these bucket list items be a drawback when you go to resell your home later? Once you know the answer to this, you’re ready to go to the next step that first-time home buyers love…
Step 7: Find Your First Home
For the first-time homeowner (or near homeowner), this step is really the step where it all finally starts to sink in. With the help of your Realtor, you’ve narrowed down all the features you want in your first home as well as the location and other important considerations. You’ve also put them in their order of importance to you. Now, all that’s left is for your real estate agent to find several possible choices for you.
Step 8: Make the Seller an Offer
The information you’ve given your Realtor will help the two of you come up with an offer to give to the seller. You’ll come up with some ideas about how you’re going to negotiate an offer to the sellers.
Also, as a first-time home buyer, keep the following in mind as you and your real estate professional move through the process of buying your home; at this stage in the game, your offer should also be contingent on what kind of information you get back from the home inspection.
Basic Contingencies Before Closing:
While Step 8 seems like it’s the last step, there are a few important contingencies that need to occur before you can “close” on your home. These generally take 3 to 4 weeks from the time you make the offer ’til the time you close on your first home:
A) What did you learn from the home inspection? The home inspection will determine what issues the seller needs to address, to fix, etc. You’ll work with your Realtor on this. He/ she will talk with the current home owners to see how many of these things he/ she will fix. If they don’t agree to do what you’d like to have done, don’t worry. You have the option of walking away from the deal, provided that your offer was correctly written.
B) Does the home have a clear title? The title company you’re working with will conduct a title search to access the public records concerning your potential new home. This search will tell you if there are any issues such as liens against the title.
C) What did the house appraise for? The appraisal be at least the amount of the purchase price, otherwise the lender won’t loan the home.
D) Have you gotten the final approval on your loan? Although you went through the pre-approval process, your loan application will now go through the underwriting process and your actual formal approval for the home loan.
Once you go through all the contingencies, you’re on your way to closing for your new home!