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If you’re thinking or in the process of buying your first home, the whole process may sound complicated and confusing. Not to worry by the end of this article you’ll know how to be prepared to buy your first home. However, it doesn’t have to be if you’re prepared. No matter where you’re buying your home it may be in the West coast or East coast these are the 10 things you should know before buying a house to make the process for a smooth sail.

Step 1: Make sure you’ve all basic necessary documents handy.

Make sure you’ve all basic necessary documents handy. Having your documents handy not only makes the process easier but it also conveys the message to lender that you’re responsible and ready for this. Here’s a list of documents you will need: 

• Bank statements: To secure a pre-approval letter and a mortgage you’re lender will ask for your last 30 – 90 day bank statement. If you’ve multiple bank accounts it’s wise to submit all so the lender can verify you’re total incoming and outgoing funds. I always recommend my clients to be ready with their stocks, bonds, 401K and any other source of income statement other than salary alone. It adds value if needed but definitely doesn’t hurt. 
• Proof of funds (POF): A Proof of funds is a lender-issued document showing the buyer can cover the purchase costs which includes closing cost, home insurance, taxes and few more along with pre-approval letter.
• Pre-approval: A pre-approval letter from your lender shows sellers that you can bring the money on the table on the day of closing and yes you’re a serious buyer and not just window shopping. Generally pre-approval letter is valid for 90 days.

Step 2: Real estate agent can make your experience great and a memorable one

Having a great relationship with your real estate agent can make your home buying experience great and a memorable one. You can find more info about who is real agent and what do they do by reading this article Who Is A Real Estate Agent And What Do They Do? After knowing what to expect from a realtor this next article will help you identify the right real estate agent Who Is The Right Real Estate Agent And How Can You Find One? 

Communication is key with your Real estate agent 

Many houses comes up in the market but not all houses are for all buyers. Communicating need vs want to your real estate agent will help the real estate agent to find the one to your requirement. This communication may include budget, any school zone requirement and so on.

Once you start showing process share your feedback (your likes & dislikes) about the house. This is a very important for your agent so he / she can include Be honest and grateful that they are taking the time to show you the house, even if it’s not a good fit. 

Step 3: Check if qualify for first-time homebuyer programs

Based on many factor you may qualify for first-time home buyer credit. Check with your lender and federal or local housing agencies regarding the same. If you qualify then you can use this amount towards closing cost or even to your down payment

What does first time home buyer means? First time home buyer means you are purchasing home for the fist time or have not purchased a home in the last three years. One basic criteria to qualify for first time home buyer is your income.

Step 4: Determining your needs vs what is essential

It may sound funny but actually this works in favor for you. Same like your grocery list make a list about what features you need and what you don’t or the upgrades that you can do it later before you start your house search. This list will help you to filter out unwanted listing that doesn’t match your need which indirectly speed up things. Here are few things in my experience:

• Style and size: Do you prefer a Condominium, townhouse, or single family home and what style like ranch, colonial and so on. 
• Property size:  Other than the house are you looking for backyard where you and your children can enjoy or for gardening and pets. Are you looking for a house with swimming pool, sunroom or a deck? Do you need more privacy in the backyard like lookout pond or forest?
• Amenities: In my personal opinion this should not be a reason for you to knock out a beautiful property that matches your list. Appliances and flooring or paint or cabinets can be changed based on your need over the period of time. Please don’t include amenities as your top priority when deciding on a house. 

Step 5: What cost’s can add up to your purchase price?

You’ve calculated the purchase price and down payment. Based on this you’ve also calculated how much your monthly mortgage is going to be. Look for other costs that can add up to your purchase price. I’ve listed the most common costs that needs to be factored in:

• Closing costs: n general closing cost averages to 2% to 5% of the total loan amount. For example if your loan amount is $400,00.00 then your closing cost can be anywhere from $8000.00 to $20,000.00. Closing cost needs to be paid on the day of closing. These charges are for different vendors who work for you to transfer ownership from previous owners to you. 
• Property taxes: On the day of closing since the ownership is being transferred to you now you’re responsible for the property taxes. This amount is calculated on pro-rated basis. You can ask your realtor about property tax at the time of showing or you can simply go to your county website and type the property address and view tax history.
• Homeowners insurance: It’s exactly the same as you buy a car. You need car insurance on the day you take your car delivery. In home purchase is also the same you should buy your home insurance and submit proof of home insurance on the day of closing. Home insurance guarantee that you and your lender are covered in case of any accident.
• Moving costs: This cost is totally depend on how far are you moving and how are you moving. Are you going to hire packers and movers or DIY move. If you decide on packers and movers get quote from 2 to 3 vendors and compare. If you decide on DIY moving then factor moving box cost, packing tape cost and rental truck and big part who is going to help you in load and unload those heavy stuffs.

Step 6: Are you going to swim on normal water condition or on tide

When I say are you going to swim on normal water condition or tide I mean or you going to buy a home in buyer’s market or sellers market. Because when you swim on normal water condition you control how deep and how long you want to swim but on a tide, you still swim but not on your comfort level and it’s going to be tough. Same in a home purchase. If you buy during buyers market then you control the price you want to pay for the house that you’re interested but if you’re buying when its a sellers market then you may end up paying more for the property that you’r interested in.

Buyer’s market is where more number of houses available in the market and less number of buyers. This condition favors the buyer as the demand is less than the available homes in the market.

On the other hand Sellers market is where less number of houses are available in the market but more buyers are looking in to buy. This condition favors Sellers since the demand in high but inventory is less. For the major part after pandemic this the market condition at the time of writing this article.

Have a conversation with your realtor to understand the market.

Step 7: Look at a bigger picture

As I mentioned in step 4 don’t let a beautiful property slip out of you just because some amenities or paint color doesn’t impress you. Cabinets can be changed, wall paper can be teared and painted, oak cabinets can be removed and replaced by white cabinets with cherry wood if needed, older appliances can be upgraded to stainless steel, older electrical outlets can be converted to smart switches and outlets over the period of time as and when you need or you’ve funds. Buy for less and invest in upgrades. Doing so also gives you an advantage for you to select what you want in your house rather than buying the previous owner interest. So look at a bigger picture which is the property that you’re interested in.

Step 8 : Larger home improvements can be expensive

When looking at bigger picture as said in previous step consider repair cost for plumbing, roof replacement, HVAC replacement, upgrading kitchen counter tops to marble from wood, rewiring or striping a wall to make open kitchen concept may cost you more. In real estate deal these are called as big tickets. Make sure you factor these cost when looking at a property. Get a quote from multiple contractor and compare.

Step 9: Home maintenance cost

So far you live in a rented apartment or home where you inform the owner and they take care of any repairs but now has a home owner all responsibility is on you. When I say all from exterior to interior. Lawn mowing, snow shoveling, trimming your trees, cleaning the gutters to prevent back flow of water into your house and upgrading to wooden flooring or replacing old carpet. Property taxes and home insurance all these are additional expenses for a home owner. Factor these costs when you’re budgeting to avoid any surprises after you move in. Typically these cost may vary anywhere from 1 % to 2% of your property value. Start saving on monthly basis so you don’t need to break your bank when needed.

Step 10: Lastly, Take time before you decide to become a home owner

If your work is not stable or if you’re on a project for a short term and need to relocate at the end of your project then hold on to your home buying thought. Because every time you buy or sell you pay fees accordingly.

Second major thing is don’t rush in making a decision like I need to buy a house with in 6 months. First you need to find the property that matches your interest which may happen on your first showing or it may happen after 20 visiting 20 different properties. Wait till you find the property that match your interest don’t buy because you need to buy. It is going to be your home where you and your family spend time over the years. If you’re on rental apartment don’t decide to buy before your lease ends because after you submit your offer it may take anywhere from 30 to 60 days for entire process to complete. Give some time and go on month to month rental option.

Speak to your realtor to understand the market clearly and also set your expectations to your realtor so your realtor can help you in finding your dream home.

If you’re looking for a real estate agent for your buying or selling need. Please feel free to reach out to me at swamitherealtor@gmail.com

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