Although the real estate market was sent reeling for a moment under the weight of the pandemic, it didn’t take long for the industry to adapt to a “new normal.”
The housing market is still one of the brightest spots in the U.S. economy and still a wise investment strategy for everyday Americans.
Buying your first home brings with it a plethora of emotions, from excitement to apprehension. Once you understand the process, and realize that there are specific steps to take, it becomes a lot less anxiety-filled and much more exciting.
Let’s take a look at the baby steps that will take you from deciding to purchase a home to the closing table with the least amount of hassle.
How is Your Credit?
Figuring out where you stand financially and applying for a mortgage are the first steps on the road to home ownership. First, think about your credit. If you haven’t checked it in awhile, it’s a good idea to get your reports from the three major credit reporting agencies.
Every U.S. adult is guaranteed one free credit report annually from each of the three major reporting agencies. They are not automatically sent out; you need to request them.
While the internet is full of sites that offer free credit reports, there is often a catch.
“For example, some sites sign you up for a supposedly “free” service that converts to one you have to pay for after a trial period,” warns authorities with the United States Federal Trade Commission.
“If you don’t cancel during the trial period, you may be unwittingly agreeing to let the company start charging fees to your credit card.”
Therefore, they suggest that you use the only company they authorize: AnnualCreditReport.com.
Go over the reports first to look for errors. Take the time to fix any errors before applying for a mortgage.
How are Your Finances?
Knowing where you stand financially is vital to knowing how much you can comfortably spend on house payments every month.
So, step number two involves sitting down with all your bills and determining how much money you bring in and how much goes out every month.
You’ll also need some money set aside for the down payment and closing costs. Some sellers can be persuaded to help with closing costs but it’s not a guarantee you’ll find one, so make sure you have from 2 to 4 percent of the purchase price for closing costs.
Shopping for a Home Loan
Finding a lender willing to lend you the money for a home puts you in a strong negotiating position with home sellers. The lender will let you know how much of a loan you’ll get, at what rate and supply you with a letter of pre-approval.
Shopping for lenders is important so that you can compare rates and terms. And don’t be mislead by the stated loan rate if you’re shopping online. Compare the annual percentage rates (APR) and the fees of each lender.
Lenders will supply you with a loan estimate in a format that is easy to compare with the estimates of other lenders.
NOW you can go home shopping!
Just as soon as you compile your wish list, that is. Write down everything you want in your new home. Of course, you most likely won’t get it all, but it’s important to get clear on what you want.
Go over the list and remove anything you feel is just too unrealistic for your situation. Then, rearrange the list so that the three most important items are at the top.
These three items are your priorities and you should share them with your agent. This way, you’re only shown homes that fit your criteria, saving both your time and ours.
Next, choose a neighborhood. If you’re new to the area we are happy to help you with this step. We have extensive knowledge of all of our local communities, including schools, parks and other amenities.
When you have several neighborhoods in mind, we can go shopping for your new home!