Deciding to purchase your first home is a huge step. Congratulations! Now that you’ve set your eyes on homeownership, you probably have countless questions about how to navigate the process for the most successful results. Here’s what you every first-time home buyer should know before closing on a new home.
Consider Your Mortgage Options
When it comes to choosing a mortgage, you must first consider how your current financial situation and future goals intersect. Some helpful questions to ask yourself include:
- Where would you like to live?
- What style of house are you looking for?
- What is your credit-to-debt ratio?
- What is your ideal repayment plan (short-term or long-term)?
- Which type of loans do you intend to use (conventional, FHA, VA, etc.)?
- What additional fees do you foresee (moving and/or closing costs)?
Once you have the answers to these questions, it’s time to start saving money toward your down payment and building your credit to become a stronger loan candidate. According to Zillow, 55% of buyers make some type of financial sacrifice to buy their home. Still, you should not feel forced into a financial situation you’re uncomfortable with in order to achieve your goal quicker.
This part of the process can take as long as you desire, as you are the only one who determines whether you’re ready to move on with the next steps. Remember that it’s not a race to be done first, but a race to be done right. Take your time.
Tip: The more specific you are in your planning, the easier it will be to track your progress toward achieving your goals. Make a fun fill-in chart to see your impact and celebrate your hard work!
Search for Your New Home
If you’ve saved enough money, achieved your financial goals, and are ready to move forward with purchasing your new home, the next step is to find a realtor to help you select a house you would like to move forward with (as well as some backup options!) and begin to explore your loan options with different lenders.
Comparing mortgage rates is an essential step toward picking the best financial option for you and your family, so be sure to explore at least 2-3 options before making your decision. Once you make a selection, it should take around 30 days to get pre-approved for a loan—and then the real fun begins.
Make an Offer
With the funds secured, you’re just about ready to make an offer on your dream home! But before making that important decision, there are a few things you must do:
- Attend an open house or do a walkthrough of your future home
- Hire a professional to conduct a home inspection
- Reread all paperwork and documents for any issues or discrepancies
- Consider home insurance options
Once you’ve checked all the boxes on this list, you are ready to make an offer! Try to be as fair as possible when deciding how much money to put down and invest in your new home. Once they accept the offer, congratulations—you’re (almost) officially a new homeowner!
Close the Sale
Closing the sale should take around 30-60 days, as determined by the details of your exact sale and situation, but once you sign the appropriate paperwork, you now officially own your first home—and that’s something to celebrate. Be sure to keep a record of the following documentation as it is imperative to your future financial success:
- Settlement Statement
- Deeds (home, trust, mortgage)
- Promissory Note
While this checklist is certainly comprehensive, taking the process one step at a time will help you reduce stress, manage your expectations, and ensure you do your due diligence at every turn.