First-Time Homebuyer’s Checklist
Ready to purchase your first home?
- Determine Your Purchasing Power: It’s best to determine how much house you can afford early in the process to avoid falling in love with a home that will stretch you too much financially. You may also decide that you need time to make some adjustments that could significantly impact your home purchase terms. Starting with setting a realistic budget will make the rest of your home buying process much smoother. Our brokers can help you put these decisions into perspective. We’ll calculate your debt to income ratio and show you where you stand. Most people don’t know the calculations we use so it’s best to contact a professional to ensure we are performing your income and debt calculations as required by applicable loan guidelines.
- Find a Pro: You don’t have to work with a real estate agent to buy a home, but it can be very helpful, especially on your first home purchase. Your agent should provide insight into the local real estate market, negotiate on your behalf with sellers, schedule showings at potential properties, and write all of the legal contracts.
- Get Pre-approved by a Lender: Meet with a lender to see what terms they can offer and how easy they are to work with before deciding on a company. Once you’re satisfied you’ve selected a company with knowledge, experience, and a competitive edge then go ahead and ask them to pre approve you. A broker like Montezuma Mortgage can shop your mortgage with a multitude of lenders and combine different options, which can make a significant difference in the terms offered to many borrowers. We can find out who’s going to offer you the best rate in just a few minutes; in fact if you’re reading this after January 1st 2023 then just click the “today’s rates” tab at the top to shop your rate right now. There is a large spread in the rates offered by lenders in the market so you have to shop around or work with a broker to know you’re getting a decent deal on your mortgage. An important note is that you should not select a lender based solely on the interest rate offered because incompetence can cost you more than a slightly higher interest rate ever will. Make sure your lender is responsive and easy to get a hold of. There’s nothing worse than you getting blindsided by an issue during the transaction and not being able to get a hold of the person who’s supposed to be running point.
- Search, Search, Search: This is where working with a Realtor can save a lot of time. You provide them with your home criteria and budget; they search through the available homes to find the best fit. You can visit potential homes through private appointments or open houses, which your Realtor will set up. Don’t be afraid to keep searching until you find just the right place to call home.
- Make a Purchase Offer: Once you find the right home, your Realtor will draw up a purchase offer and send it to the seller. They can accept your offer, reject your offer, or come back with a counteroffer. Negotiate price and terms until both you and the seller agree on the sale. If you can’t agree, go back to step four.
- Get an Inspection: It’s best to get a home inspection completed by a licensed professional. This is how you find out about any major repairs that need to be done. This contingency is often written into the purchase agreement. If anything is found that you are not comfortable with, you can back out of the purchase. You also have the option to request that the seller fix major issues or lower the purchase in order to move forward. An appraisal is another type of inspection usually required by your lender to allow an independent third party to verify the home value.
- Close on Your Purchase: This is the most exciting step—when you sign the official purchase agreement and get your new keys. Closing generally takes place at a title company and is scheduled by your real estate agent, title agent, or lender. Congratulations! You are now a homeowner.