If you are considering buying your first home, this First-Time Homebuyer Guide can help you get started, understand the process, and know what to expect as you begin this exciting journey into homeownership.
There are a lot of advantages to owning a home, and additionally to being a first-time homebuyer. You may qualify as a first-time homebuyer even if you have owned a home in the past, but it’s been over three years, or your spouse has not previously owned a home. Even if you owned a home with a former spouse but are now single, you may still be considered a first-time homebuyer and have access to state programs, tax breaks and federally backed loans.
First-Time Homebuyer Guide
- Financial Audit
The first step in preparing for homeownership is to do an audit of where you are financially and where you need to be to afford to buy a home. It’s prudent to have a minimum of three months’ living expenses in a savings account before you apply to get preapproved for a mortgage. In fact, you probably won’t be able to get preapproved without it. Lenders will also look at how much debt you have such as credit cards, auto loans, etc. as a major factor in determining whether you qualify and how much you can borrow for a new home.
- Detailed Budget of Expenses
You should make a detailed budget to know exactly what your expenses are each month and how much you are able to allocate to a mortgage payment. Calculate everything you pay each month and don’t forget to include quarterly and annual payments for things like insurance or other expenditures that aren’t paid monthly.
- Getting Preapproved
Before rushing out to look at homes, it’s a good idea to get preapproved with your lender. That way you know how much you can pay for a new home including the monthly mortgage payment, down payment and closing costs. There are loans available for first-time homebuyers that may have a reduced down payment amount or no down payment. In some states, home sellers pay the bulk of the closing costs and new home builders are often able to reduce closing costs for their homebuyers as well.
- What Type of Home do You Want?
Looking at homes and neighborhoods online is a great way to get an idea of what’s available, determine your likes and dislikes and get an idea of the current real estate market pricing. Most real estate syndication sites like Zillow and Realtor.com show interactive maps of where the homes are located, school districts, and detailed photos and videos of the homes. They will also list the number of bedrooms and bathrooms, interior and exterior details, number of floors, and even appraisal estimates.
Finding A Home
- Finding A Buyer’s Agent
If you’ve never been through the home buying process before, you would probably benefit from hiring a real estate agent, often referred to as a buyer’s agent, to help you find and purchase your first home. Buyer’s agents typically get paid from the seller’s proceeds. Make sure to check ratings, get referrals and ask a lot of questions when choosing a buyer’s agent to make sure you find someone that will work well with you, and for you. Your buyer’s agent will help you find homes to tour, explain terms you may not be familiar with such as due diligence money and earnest money, check for visual problems with the homes you tour, determine community HOA fees, if any, and help you make an offer when you find a home you want to purchase.
- Looking For a Home
Once you’ve done some initial research online it’s time to narrow down your list of homes and make plans to tour homes and neighborhoods. If you’re working with a buyer’s agent, you can send them your list and they will also find similar homes to show you based on your preferences and budget. You can take advantage of open houses in the area to tour homes on your own, but make sure to let any Realtor or private party seller know that you are working with a buyer’s agent before getting too far along in the conversation.
Buying A Home
- Making an Offer
Once you find a home you really like, you’ll want to be able to make an offer. To do that you’ll need financing. There are a number of mortgage programs available, with some specially tailored to first-time homebuyers. You may only need to put down 5% or less for a down payment as a first-time homebuyer Vs the standard 20%.
First Time Homebuyer Programs by State
- Buying a Home
The home buying process varies depending on whether you are buying a resale home or a newly built home. With a resale home, you will need to have a professional home inspector go through the home to find any existing issues and generate a list of things that you may need to repair within the next year or two. A newly built home will come with a new home warranty to protect your investment for at least one year. Some builders, including McKee Homes, offer a more comprehensive home buyer’s warranty program that covers systems for two years and the structure for up to 10 years.In either case, you’ll need to have the home appraised which will be one of the determining factors in how much you can borrow against the home. Your buyer’s agent can walk you through the closing process and your lender can give you a list of all fees that may be part of your closing costs such as private mortgage insurance, title insurance, taxes, etc.
It’s easy to get overwhelmed during the home buying process but with the help of this First-Time Homebuyer Guide to help you visualize each step of the process, you can find your way to homeownership and a brighter future.
It may take a few months or even a year from start to finish, but if you work through each step of this First-Time Homebuyer Guide and take advantage of the assistance available from lenders, real estate agents, government programs and home builders, you can become a homeowner and start building equity for your future!
If you want more information about buying a newly built home, please contact us at 910-672-7296 or use our Contact Us page form. Our friendly, knowledgeable online sales consultants can answer any questions you have about the new home buying process and our 2-10 Homebuyer’s Warranty.
If you want to get preapproved for a mortgage with our preferred lender, please visit our New Home Financing web page which includes a free mortgage payment calculator and links to get preapproved online.
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