I remember my first time like it was yesterday. What if we're not ready? Should we keep saving? How do we get started? I had so many questions and it all felt so overwhelming. I honestly think we would have continued to rent for years longer, had we not found the support we did when we did.
Everything started to make sense once we spoke to a mortgage broker. He broke the process down and showed us a roadmap, so to speak. Fast forward to today, having owned two homes and made a career change to the mortgage industry myself!
I'm here to tell you its possible and you may be more ready than you think.
Let's break the homebuying process down into some steps, outline some key actions for first-time homebuyers to take, and clarify all the confusion about mortgage rates and getting started with the loan process.
Steps to Buy Your First Home
The homebuying process can be broken down into 6 main steps:
1. Research Your Budget
Understanding how you spend your money is crucial. Before diving into the process, evaluate your budget and identify a comfortable payment range. If you are purchasing with another person, make sure you are both on the same page budget-wise.
2. Get Pre-Approved for a Mortgage
Gain a realistic perspective on what you can afford by getting pre-approved for a mortgage. (We can help you with that here when you're ready.) This step not only helps you understand your budget but also guides you towards the type of loan that suits your financial situation.
3. Find a Real Estate Agent
Ask for referrals to an experienced and first-time homebuyer friendly realtor. Their insights into the market and guidance through the process can be invaluable.
4. Start Looking at Homes
You can begin your search online, but its best to visit homes in person to get a better feel for the home and neighborhood.
5. Make an Offer
When you find the perfect home, it's time to make an offer. You realtor will help you negotiate a deal you're comfortable with. The right home is worth the patience and effort it takes to secure it.
6. Finalize the Loan
Your mortgage will be approved, an appraisal of the home will be done to confirm value, and closing will occur which makes the home officially yours!
Take it one day at a time and allow your trusted team of experts to guide you. If you're ready to jump in, our team is here to assist you. Contact us to better understand your budget and get started with a pre-approval.
Three Things to Do as a First-Time Homebuyer
There are actually some perks and program designed specifically for first-time homebuyers to help make buying a home more accessible.
1. Use a Lower Down Payment
Contrary to popular belief, you don't need a 0% down payment. Down payments can be as little as 0-5% depending on the loan program and by putting less down you have more set aside to make upgrades to the house, keep your emergency fund well stocked or invest it elsewhere.
2. Know Your Budget Comfort Zone
No one likes to be stressed about money so be sure to stick to your ideal monthly payment and sales price rather than the max you qualify for.
3. Ask the Seller to Cover Some of your Costs.
We are seeing sellers willing to pay buyers’ closing costs or even subsidize their mortgage payments for the first few years, especially while interest rates are higher. This can save you thousands so be sure to discuss this possibility with your lender and Realtor. It doesn't work in every situation, but the right team can often find a way to negotiate this into the deal for you.
Understanding Mortgage Rates
Mortgage rates can be confusing, especially if you're new to the housing market. It’s important to note that there’s not just one mortgage rate. There are multiple factors that decide what rate individual buyers will receive.
Here are some factors that go into determining your mortgage rate:
Your credit score
Loan type (conventional, FHA, VA, Jumbo, etc.)
Property type (single family residence, condo, manufactured home, multi-family, etc.)
Occupancy type (primary, second home, investment property)
Geographic area / zip code
Discount points (a.k.a. "buying down the rate")
That’s why it’s important to work with a lender you trust to find the best option for you. If you're ready to take the first step, reach out to our team. We're here to make your homebuying experience seamless and stress-free.
Feel free to check out more of our first-time homebuyer resources below!