If you’re looking into buying a home for the first time, it can seem intimidating. Between the savings, down payment, and approval, the “to-do-list” can seem never-ending. Luckily we have a cheat sheet to the homebuyer’s basics. Check out our First-Time Home Buyers Checklist:
1. Check your credit score.
Your target should be 700 or above, but don’t worry, you can certainly buy a house with lesser credit. The only caveat is that you won’t qualify for competitive mortgage rates that will get you the lush two-story home you’ve always dreamed of.
Did you know for every point your credit score is below 800 you’re going to pay more in interest?
Yes, the difference between 3.9 percent and 4.9 percent may not seem like much now, but that one point will cost you about $32,000 on a $150,000 30-year fixed-rate mortgage in the long run.
You do the
math!
2. Organize and gather your personal information.
Your income and monthly expenses, bank statements, and income verifications will certainly be closely looked at, so be prepared with at least 2 years of all documents.
3. Shop for a mortgage lender.
Make an appointment with a mortgage lender to see if you qualify for a mortgage you can afford. Remember that different mortgage shops offer a wide variety of rates and programs, so if one says no, there’s always another.
4. Secure mortgage pre-approval.
Once you’ve found the mortgage that’s right for you, you’ll want to show sellers that you have what it takes to buy their home.
In hot markets, a pre-approval is almost always required for a seller to take your offer seriously. That’s because it spells out exactly how much a lender has agreed to loan you, thus
assuring the seller that you’re both willing and able to buy.
5. Save up for a down payment.
Make sure you have at minimum, 10% saved for a down payment—20% if you want the best interest rates and to avoid private mortgage insurance (PMI), which can run up to $700 a month!
6. Find a real estate agent.
When you are a buyer, you get the expertise, knowledge, and guidance of your real estate agent without having to pay a dime! The seller pays both the buyer’s agent and the listing agent’s commission. So, ring up every agent you know!
7. Browse listings online.
Now you can open those apps and websites for your dream home. Make a wishlist based on the pre-approved mortgage and start sending them over to your real estate agent so you can schedule a viewing.
8. Put in an offer.
Once you’ve picked a house, you have to submit an offer. The seller has to accept it for the
house to come off the market or for the payment to go into escrow.
9. Pass the inspection.
What is escrow?
When you make an offer on a home, you will write an earnest check that will be placed in “escrow.” This means it isn’t going directly to the seller. Instead, it is held by an impartial third party until you and the seller negotiate a contract and close the deal.
During this time you get the house inspected and work out the kinks of the contract based on the condition of the house.
10. Close the deal.
This is where you celebrate! Pat yourself on the back and pack your bags. You’re now a homeowner.
Tia Muhammad, BS, is an award-winning freelance content & media creative, copywriter, blogger, digital designer, and marketing consultant. She owns the boutique content and digital media company, jackieGLDN|studio.
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