If you are newly engaged, you are probably already thinking about buying your first home together!
Buying your first home together is something you need to plan for just like planning your wedding.
And just like pre-planning for your wedding, you’ll want to prepare yourself by doing some research.
We thought it would be a great “How to” article for our Home & Lifestyle page so we went right to the source for our Real Estate Advice for First-time home buyers! We recently spoke to Real Estate Agent Shannon Tsiros from REMAX Real Estate to ask her about FAQ’s and pro-tips for first time home buyers.
The most important Pro-tip for First-time Home Buyers …Start off by doing some research before purchasing a new home.
Determine how much “Home” you can afford. As a first-time home buyer, it’s important to have an accurate idea of how much money you can borrow for your new home and most importantly, how much you can afford. Always use what you can afford for a mortgage payment as your main starting point. This will help you decide how much home you can shop for and mortgage. Use your price-point to start your searches in the area where you hope to purchase your first home. Start by googling a free mortgage calculator online.
What Is Your Credit Score? First-time home buyers should obtain a copy of their credit report and review it. Your bank/mortgage company will request your credit reports, but it helps if you know what your credit standing is before you start the process with the bank. It’s smart to check your credit reports from time to time to make sure there are no errors on them as well. And if you find an error, it’s much easier to fix it before you find your dream house, rather than working on correcting them when you are trying to close on your mortgage/loan. Your mortgage banker can give you pro-tips to help you clear up any issues with your credit as well.
What Kind of Mortgages Should You Consider? For first-time home buyers, mortgages can be overwhelming and sometimes confusing. Ask your mortgage banker questions! Don’t be afraid of asking the “obvious” questions, every person and loan is unique, Ask your questions with confidence and your banker will appreciate that you are business savvy and preparing to help them close your loan for you. A good mortgage banker will have a questionnaire for you about your finances and your needs so that they can suggest the best fit of mortgage program for you.
Determining factors for your mortgage program and approval will depend on:
~Your current financial situation.
~What your financial standing will be in the next few years.
~How long you want to stay in your new home.
~If your income is steady or fluctuating.
What Documentation Do You Need? Your bank will give your their particular requirements, but most often you will need W-2’s, pay stubs, tax returns, and copies of bank statements items to complete your mortgage application. Bank and personal financial statements (collateral for your loan) will also need to be provided.
Get Pre-Approved for your mortgage. The best way to start is to get pre-approved. Check your credit (scores and reports) and check your budget to see how much “home” you can afford. With a pre-approval, you are also in a better position to negotiate with a the seller as they will know that your offer is substantiated. This will also help you in your preliminary searches (home “shopping”) as you will avoid wasting time looking at homes outside your price range. (see Part 2 of our First-time home buyers article for Shannon’s “pro-tips” on “why to get pre-approved for your mortgage before you start shopping for your first home together” coming up next!)
What Is a Reasonable Offer? Even if you are very familiar with the area and understand how to price an offer on your first home… be a savvy business person and seek out a real estate agent. Your real estate agent works for you (on your team!) and is your advocate when it comes to deciding how much your offer should be for your first home purchase. Your real estate agent will run comparable sales in your area and check prices per square foot for recent sales. This will prepare you for a more informed price to offer for your first home purchase.
What Is a Purchase Agreement? The purchase agreement sets the amount of your offer and usually includes extra details, for example, appliances that remain in the home, who pays closing costs (i.e. the seller or the home buyer) and when you’d like to take possession of the house. The seller (or selling agent) will have you sign the purchase agreement and offer “earnest money.” (Earnest money is a deposit showing that you’re serious about purchasing the home).
Should You Have the Home Inspected? Yes, you should! In order to get to the “next step” of the purchase agreement, you will need to have a home inspection. Home inspections cost only a few hundred dollars from a qualified & licensed building inspector. Not only is it required, but you will use this inspection as a “punch list” for your purchase and potentially a negotiation point during the process with the seller. The home inspector should provide a very detailed summary report listing the condition of each item, and recommending repairs. You should always be present when the home inspection takes place. It usually takes a few hours and you’ll learn not only about the condition of the house but how everything works. Ask questions!! The home inspector is there for YOU the buyer.
A home inspection identifies any major repairs that may be needed, as well as the positive aspects of the home. Sellers also benefit from home inspections, as they are able to identify and correct potential problems that may affect the sale of their home. If the home inspector discovers potential repair needs, the seller may adjust the purchase price of the home or simply repair the problems. There’s always the possibility that the home is in such bad shape or has some monumentally costly problem that it’s no longer the home you want. If that’s the case, get your deposit back and resume your house hunting. If this happens, don’t be discouraged, it’s a good thing! That means “that house” is not “the” house for you… and keep moving on with your first home search.
Do You Need Homeowner’s Insurance? Yes, you’ll need a valid homeowner’s insurance policy before you close on your home. You can’t get a mortgage without it.
What Are Closing Costs? This is probably the top asked question by first-time home buyers. All mortgage lenders are required by law to disclose in writing you’re a “good faith estimate” which estimates closing costs and fees, so you’ll know what you miscellaneous fees you can prepare for for your closing.
What happens before your closing? To prepare you for your closing, your bank will send you separate and updated documents that outline the actual costs you’ll pay at closing. Your realtor and bank will also explain what you need to bring to the closing (for example, a valid picture ID, your closing costs in a certified check, etc) along with any other additional documents that might be required for your individual circumstances.
Who attends your closing? For first-time home buyers ~ you, your mortgage lender, the seller, the seller’s mortgage holder, respective attorneys, real estate agents, and the title company representative. After everyone signs all the respective documents and checks are exchanged, you’ll be given the keys to your first home!
As a first-time home buyer, the best advice is to first and foremost, do your research and ask questions. Ask for recommendations from people you trust about their preferences for mortgage lenders, banks, and realtors, and home inspectors. Most importantly, when buying your first home together, choose professionals that you feel comfortable with & that are experienced.
Shannon Tsiros can be reached at REMAX Real Estate Group for all your real estate needs and her contact info is on our Vendor Catalog Page as well. And remember to check back for part 2 of Shannon’s “pro-tips” coming up soon!
Questions? Need more detailed info? Feel free to contact Lisa Sammons Events at anytime.
We are happy to help!
Article: Lisa Sammons – Owner/Principal Planner & Lead Designer – Lisa Sammons Events /Contributor & Features Editor: Style, Inspiration, & Design
We are REAL Wedding Planners servicing New York and New England.
We also travel to where ever our clients need us. If you are planning a destination wedding, we are happy to plan your wedding … where ever and whenever!
Are you a DIY Bride and just want a few pointers or a consultation?
We are happy to schedule a meeting or a call with you. Feel free to contact us at anytime to set up a DIY planning meeting. moc.stnevesnommasasilnull@ofni or via phone @ 603-828-6490.