First Time Buyers: The IVG Guide For Beginning Your Real Estate Journey
Is it happening? Is this the year? Are you officially looking to become a first-time homebuyer? Are we asking lots of questions because we’re so overly excited for you? If you answered yes to the first three, then we answered yes to the last one, and that means that we’re here to help you get ready to buy your first home! Congratulations on reaching this major decision! We’ll try to keep our cool while we walk you through this exciting process.
Purchasing your first home is an incredible achievement; however, before you unlock the door to your dream home, there are some essential first steps to take to ensure a smooth and successful transaction. This blog post is designed to give you an overall idea of what the entire home buying process looks like and to provide helpful tips and insights to enrich your experience. Let's start this informative journey together.
Step 1: Determine overall readiness
The first step to buying a home is to make sure you’re financially and emotionally ready. Buying a home is a big commitment that requires a lot of planning, saving, and decision-making. It can be both exciting and exhausting; so, the more you know about what you want, in your first house, the better.
Start by asking yourself some questions, such as:
Why do you want to buy a home? What are your goals and expectations?
How long do you plan to stay in your home? Are you looking for a starter home or a forever home?
How much can you afford to spend on the down payment? What is your budget, and how will you finance your purchase?
How is your credit score? Do you have any debts or other financial obligations that could affect your ability to get a mortgage?
What are your preferences and priorities for your home? What type of home; where at; how big; what kinds of features and amenities do you require or would like?
These questions will help you determine if you’re ready to buy a home, and will help make sure all parties involved in the purchase are aligned on expectations for the property. If you’re not sure about any of these aspects, you may want to do some more research, consult with a financial advisor, or wait until you know what you truly want.
Step 2: Get Pre-approved for a Mortgage
Once you’ve determined that you’re ready to buy a home, the next step is to get pre-approved for a mortgage. A mortgage pre-approval is a letter from a lender that states how much money they are willing to lend you, based on your income, assets, debts, and credit score.
A mortgage pre-approval will help you in several ways, such as:
Looks Good: It will show sellers and agents that you’re a serious and qualified buyer, and give you an edge over other buyers who don’t have a pre-approval.
Keeps You Realistic: It will give you a clear idea of how much you can borrow and what your monthly payments will be; you can narrow down your home search and avoid wasting time on homes that are out of your price range.
Faster: It will save you time and hassle when you make an offer, as you won’t have to wait for the lender to approve your loan application.
To get pre-approved for a mortgage, you’ll need to provide the lender with some documents, such as:
Proof of Income: pay stubs, W-2 forms, tax returns, or bank statements
Proof of Assets: savings, investments, or retirement accounts
Proof of Debts: credit card statements, student loans, or car loans
Proof of Identity: driver’s license, passport, or social security card
The lender will check your credit score and history, and may ask you some questions about your financial situation and goals. Then the lender will review your documents and information, and give you a pre-approval letter that states the loan amount, interest rate, and terms that they are offering you. You can use this letter as a tool to negotiate with sellers and agents, and to compare different loan offers from different lenders.
Step 3: Find a Real Estate Agent
The next crucial step in the home-buying process involves seeking out a knowledgeable real estate agent to guide you through your search and eventual purchase of a property. These licensed professionals specialize in representing either buyers or sellers during real estate transactions, and providing invaluable expertise and assistance every step of the way.
A real estate agent can provide you with many benefits, such as:
MLS: They have access to the local multiple listing service (MLS), a database of all the homes for sale in your specified area. They can help you find homes that match your criteria and budget, and arrange showings for you.
Local Guide: They have knowledge and experience in the local market, and can advise you on the best neighborhoods, schools, amenities, and trends. They can also help you evaluate the condition, value, and potential of different homes, and point out any red flags or issues that you may not notice.
Real Estate Expert: They have negotiation skills and expertise, and can help you craft a competitive and attractive offer, and handle the back-and-forth with the seller and their agent. They can also help you with the paperwork, inspections, appraisals, and closing process. They make sure everything goes smoothly and according to the contract.
To find a reliable real estate agent, gather recommendations from your inner circle such as friends, family, or even your coworkers who have engaged in property transactions lately. Additionally, conduct thorough research on local agents by exploring online platforms to assess their feedback, ratings, and endorsements. Interview multiple agents to evaluate their expertise, qualifications, communication approach, and schedule flexibility. Prioritize selecting an agent who aligns with your preferences and objectives.
Step 4: Shop for Your New Home
The most fun step to buying a home is to shop for your new home. This is where you get to virtually and physically browse different homes and neighborhoods, and find the one that suits your needs and preferences.
To shop for your new home, you’ll need to do the following:
Define Your Criteria: Based on your budget, preapproval, and preferences, you’ll need to define your criteria for your home, such as the type, size, style, location, features, and amenities that you’re looking for. You can also prioritize your criteria into must-haves, nice-to-haves, and deal-breakers, so you can focus on the most important aspects and be flexible on the others.
Search Online: You can use online tools and platforms, such as Zillow, Trulia, or Realtor.com, to search for homes that match your criteria. You can also use filters, maps, and alerts to narrow down your search and stay updated on new listings. You can also browse photos, videos, and virtual tours of different homes, and read descriptions, details, and reviews of each property.
Visit In Person: While online tools can give you a lot of information and insight, nothing beats seeing a home in person. You can ask your agent to schedule showings for the homes that you’re interested in, and visit them at your convenience. You can also attend open houses, which are events where sellers or agents invite potential buyers to view a home without an appointment. When you visit a home, you’ll want to pay attention to the following:
The Exterior: Look at the curb appeal, landscaping, roof, siding, windows, doors, and garage of the home. Check for any signs of damage, wear, or neglect, and see how well the home fits in with the neighborhood.
The Interior: Look at the layout, design, space, lighting, flooring, walls, ceilings, and fixtures of the home. Check for any signs of damage, mold, pests, or odors, and see how well the home meets your needs and preferences.
The Features And Amenities: Look at the kitchen, bathrooms, bedrooms, closets, basement, attic, and appliances of the home. Check for any signs of malfunction, leakage, or out-datedness, and see how well the home offers comfort and convenience.
The Overall Ambiance And Feel: Look at the overall impression, atmosphere, and mood of the home. Check for any signs of positive or negative energy, and see how well the home matches your personality and style.
Compare And Evaluate: After you’ve visited several homes, you’ll want to compare and evaluate them based on your criteria, impressions, and feedback. You can use a spreadsheet, a checklist, or a scoring system to rank and rate each home, and highlight the pros and cons of each one. You can also ask your agent for their opinion and advice, and see how each home compares to the market value and trends.
Step 5: Make an Offer
Once you’ve found the home that you want to buy, it is finally time to make an offer. An offer is the formal proposal that states how much you’re willing to pay for the home, and under what terms and conditions.
An offer can include the following elements:
The Offer Price: This is the amount of money that you’re offering to pay for the home. You’ll want to base your offer price on the market value, the condition, and the demand of the home, as well as your budget, preapproval, and goals. You can also use comparable sales, which are recent sales of similar homes in the same area, to justify your offer price. You can ask your agent to help you determine and negotiate the best offer price for the home.
The Earnest Money Deposit: This is a sum of money that you put down as a sign of good faith and commitment when you make an offer. The earnest money deposit is typically 1% to 3% of the offer price, and it’s held in an escrow account until the closing. The earnest money deposit is usually applied to your down payment or closing costs, or refunded to you if the deal falls through due to a contingency or a breach of contract by the seller.
The Contingencies: The specific conditions that need to be satisfied before the sale agreement can be officially concluded. They play a crucial role in safeguarding the buyer's interests by providing the option to withdraw from the transaction should certain criteria not be fulfilled.
We know this guide doesn’t provide the full scope of the home-buying process, but we hope it, at the very least, helped you understand the basic steps of buying your first home and gets your wheels turning for everything you want in your future-home. From all of us here at Impact Valuation Group, congratulations! We’ll hopefully see you around closing, but until then, enjoy the thrill of searching for your new home and starting your real estate journey!
