How to become a first-time home buyer in 2021
Buying a home is big commitment, make sure you are ready and committed to be homeowner. Here are some things you may want to consider.
First, Take a look at your income and employment. Lenders are not just worried about how much money you will make they will want to see a history of your finances to make sure you have a stable income. You’ll need to prepare all your finical documents such as W-2s and recent tax returns and any other additional documents your lender requests. The lenders will look at different aspects of your income such as your debt-to-income ratio which is dividing your monthly debt by your gross income. Lenders will also look at liquid assets, credit health, etc.
Once you have considered all the factors if timing, economic health, and your income are good for your unique situation then the next step is calculating how much you can afford. There is many home affordability calculators online that can assist with this. Next step, is to get preapproved for a mortgage. To get preapproved you will need to apply with your lender. There are many different types of loans such as conventional loans, FHA loans, VA loans, USDA loans. The lender will be able to explain in depth about your loan.
Now, it is time to find the right real estate agent for you! When looking for real estate agent, you’ll want to look for someone who is well trusted and looking out for your best interest. Interview several agents before deciding on one. A realtor who will help you find your home that meets your criteria, gets you showings, and helps you write offers and negotiate. Your agent should be extremely knowledgeable in your local area! The real estate agent will be able help you understand how to buy a house. Having an great agent by your side can help you navigate the housing market, submit a legally sound offer and avoid overpaying for your property.
Your agent will help you house hunt with your top priorities depending on what you are looking for. Here are some things you should consider when looking for a home.
- Square footage
- Home condition and possible need for repairs
- Access to public transportation
- Number of bedrooms
- Backyard/swimming pool
- Local entertainment options
- Local school district ranking
- Property value trends
- Property/real estate taxes
Once you have a found a home that fits your budget and needs, it will be time to make an offer! Your real estate agent will help you write an offer in writing in what you price you’re willing to pay for the home. The seller can respond in one of three ways: accept the offer, reject the offer, give you a counteroffer. Once you and the seller have agreed on an offer you will move onto a home inspection. During a home inspection, an inspector will go through the home and specifically look for problems. They will test electrical systems, make sure the roofing is safe, make sure appliances are working and much more. After the inspection closes, the inspector will give you a list of problems they found in the home.
When you receive your inspection results, go over each item line by line and look for major issues. If a home has a serious health hazard (like lead paint or mold), ask the seller to correct the problem before you close.
Now it will be time to get a home appraisal. This is a review that gives the current value of the property you want to purchase. The reasoning for this is that lenders will not lend out more money than a home is worth.
Moving closer to your closing date you will do a final walk through in your new home before you close, even if you’re 100% committed to the property. This time allows you to check and make sure that the seller has made the repairs you requested and cleared out the property.
At last, the exciting part happens you close on your new home! You’ll sign a settlement statement, which will list all your costs from the home sale. You will sign a mortgage note, which will state you are responsible to repay the loan. Finally, you will sign the deed of trust to secure the mortgage note. Enjoy your new homeowner status! Are you ready to buy house!? Call Rivard, Aul & Associates today to get started!