If you've been considering moving for awhile then perhaps you've already weighed the pros and cons of buying your first home. Owning a home has some financial advantages but there are also some significant responsibilities as well. First of all, paying mortgage payments instead of rent payments gives you the opportunity to build equity over time. Also you may even be able to deduct mortgage loan interest amounts and property taxes from your income tax (just discuss this with your tax advisor). While you have these advantages, you also must consider the maintenance, utilities, upkeep, furnishings, and repairs that will come along with homeownership.
Before you start looking at houses the first step you need to take is the process of getting your credit in order. Mortgage lenders will be looking closely at your financial history and you'll need to disclose to the lender all of your outstanding debts and they will also want to see how much money you have in savings after deducting the down payment amount. You'll need to show your employment history as well as income stability and security. Be sure to review your credit report before you begin which will allow you to correct any errors on your report before it affects your mortgage approval! Check out my blog on improving your credit score and main credit bureau links here. Also, now is the time to make sure that you have saved up enough money for a downpayment. Down payment requirements can vary depending on your loan but are typically 10 to 20% of the home's price. Keep in mind that the higher your down payment is, the lower your monthly mortgage costs will be!
After you have cleaned up your credit report, decide how much debt you can really afford. Lenders typically suggest that your housing costs (mortgage, property taxes and insurance) should cost no more than one third of your monthly gross income. Your lender may approve you for a much higher loan but be cautious and consider what is best for you. They are only telling you what you are qualified to borrow but not how much you can afford. When calculating your budget, be sure to include homeowners insurance premiums, property taxes, any homeowners association fees, utilities and monthly maintenance as well as your other monthly expenses. Your agent will be able to provide you with tax information for the properties you will be looking at.
So now that you've got your credit in order, saved some money for a downpayment, and budgeted your monthly expenses, you're ready to contact a lender to get pre-approved for a mortgage. It is important to get pre-approved for two reasons: 1. It lets you know how much money you are going to be able to work with and 2. it lets sellers know that you are serious about an offer on their home and you already qualify. Keep in mind that if you make an offer on a house with multiple bids, being pre-approved gives you an edge over other offers.
As soon as you have your pre-approval (or you're ready to get one and don't know where to start) contact a REALTOR to help you find a home! An agent will be able to walk you through the process and answer any questions that may arise. A real estate professional will be able to access multiple listings and narrow down the search for you and take you to view the houses you are interested in. There are typically two agents in a real estate transaction: the buyers agent and the listing agent. The buyers agent is working for you and the listing agent is working for the seller. Your agent will have your best interest in mind. Be sure to find an agent that you feel comfortable and compatible with and don't be afraid to ask any questions on how the process works.
Once you have found a real estate professional that you feel comfortable with, they will begin your home search process by asking you a range of questions to figure out which homes on the market will best suit your interests.
Keep in mind when you begin looking at houses that you will most likely re-sell your home in the future. Most people will not stay in their first home forever and you will want to consider your resale value. Also remember that although homes that are lower priced because they need some work may seem like a great idea, but be sure to accurately assess your abilities.
When you're ready to make an offer, your agent will most likely look at how much the seller paid for the home and how long ago, figure out how long it's been listed, and how you rate the condition of the home. They will also look at comparable homes in the neighborhood to see what price would be best to offer. You will discuss with your realtor the amount that you have in mind and they will send in your offer. Once the seller receives your offer they can either accept the offer as is, reject the offer, or make a counteroffer. Counteroffers are fairly common so don't be surprised if you receive one. A counteroffer could just be a change in the price or contract stipulations and then you can accept that counteroffer or send in another counter offer from there. The offer is not a contract until all items and stipulations are agreed upon and both of the parties sign. Once you've agreed on a counteroffer, you're pending!
Once you're pending it's time to get your mortgage loan (here's a checklist of items that you'll need), have the home inspected if it was written in the contract, get a homeowner's insurance policy, and get a home protection plan. Your agent can give you quality contact information for all of these.
Before closing you will want to schedule a walkthrough of the property. A walkthrough will just ensure that the property is still in the state that you made the offer in and that any contractual repairs were made. At closing the property will be officially transferred from the seller to the buyer! Then it's time for the moving process.
While there are a lot of things to do when purchasing your first home, don't feel overwhelmed. Real estate professionals are here to help you and walk you through the process and help you get into a house to call your home.
If you have any questions about first time homebuying you can comment below or send me an email. If you're looking to buy or sell a home in Carmel, Fishers, Noblesville, Westfield, Indianapolis, or other outlying areas, give me a call for a free consultation. I'm always here to help!
Megan Bowman
Realtor, Coldwell Banker Kaiser
Carmel, Indiana
meganbowmanrealtor@gmail.com
812-583-4620
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