Buying your first home is an exciting new adventure. But where do you start? And when?
This installment of Real Estate 101 is just for you, the first-time homebuyer. Start the home-buying adventure with confidence by following these six steps.
Is it too soon to think about buying your first home? Not at all. If buying a new home is on the agenda for your future, schedule a meeting with an agent today. They can help you determine when and what you need to do over time to be in the best position for this big move.
STEP 1: Process and Planning: Meet with a Realtor
*** six months to one year in advance ***
If you’re planning to purchase a home within the next year, set up an appointment with your Realtor soon. There’s much to do!
A year may feel a long way away, but there are many financial preparations you can put in place to will increase your purchase options and readiness. In addition to finances, conducting a bit of advance research will make your search process faster and easier when you’re ready to purchase.
Work with an agent who can share listings as they hit the market. Listings show up quickly online, but an agent serving as your exclusive representation will have access to listings that are coming soon, not just ones that are accessible to the public online.
Step 2: Money Matters: Meet with Mortgage Broker
*** six months to one year in advance ***
Most likely, the first thing your Realtor will do is suggest that you meet with a mortgage broker.
A mortgage broker will help you find out what you need to do to be financially ready to secure a mortgage. Together you’ll examine your current financial state and what, if anything, needs to change for you to be in the best financial position possible for your new home purchase. Some of the things you’ll discuss include:
- Length of time at your current position
- Credit score
- Cash on hand for closing costs
Once you and your mortgage broker feel that your financial position is secure, you’ll go through a pre-approval process. At the end of that process, you’ll have a very good feel for the amount you can spend on a house.
Step 3: Location, Location, Location!
Now that you know how much you can spend on a home, it’s time to meet with your real estate broker again. This time you and your real estate broker will delve into “location, location, location.” You’ll discuss communities that are appealing to you and explore factors that impact location choices, including:
- proximity to places important in your life, like work, sports and activities, schools and family.
- schools that fit for your family.
- where you can get the most house for the amount of money you are planning to spend.
- the pros and cons of the communities you find attractive. An experienced Realtor knows about the areas they work in. They can help you discover what you appreciate, what you can’t live without, what you can live with, and what you cannot.
First time homebuyers often focus on getting the biggest house they can afford. Be sure to seriously consider community. Once you’re established in a community, it can be difficult to move out of that community, even once you’re ready to upgrade to a larger home.
Step 4: Needs and Wants
Your Realtor can help you take the list of features you want in a house and divide them into wants and needs based on the houses you can afford in the communities that appeal to you. Features you will discuss include:
- Number of bedrooms and bathrooms
- Garage and garage size
- Outdoor space
- Distance to school/park/train station/town
- Style of home
- Finished basement
As you prioritize, your Realtor will help you evaluate which features are worth paying extra for in the beginning because they’re not easy to change (like number of bedrooms) and which features can be easily altered in the future (like finishing a basement).
Step 5: Explore!
Now that you’ve identified some communities you’re interested in, it’s time to explore. Your goal is to narrow your list to two or three communities—tops— before you switch from exploring communities to looking at houses.
Here’s why: if you try to see homes for sale in more than three communities, you may end up losing a house to another buyer while you’re trying to fit in all the houses in all the communities. Instead, explore now.
Here are some ways to expertly explore a community and narrow your list:
- See what the commute is really like. Drive from your job and other activities to the community during the times you would normally be driving. Check out rush hour!
- Drive or take the train from prospective towns to places you like to go. If you visit Chicago often for nighttime entertainment, try to take a trip from a community to see how long it takes.
- Do you plan to dine out frequently in your new community? Go to restaurants within your prospective communities.
- Visit parks, libraries, museums, beer gardens, movie theaters, shops. Does this community feel like home to you?
- Experience the community events. Visit festivals, walk around town, go to parades.
- Walk through a few open houses. This can give you a feel for what kinds of homes you can get in your budget within a particular community.
Step 6: Let the Search Begin!
*** about four months in advance ***
Once you’ve chosen two or three communities that you want to focus on for your search, and about four months before you hope to move into your home, meet with your Realtor to begin the next phase of your home search.
Discuss what you’ve learned with your community and open house adventures. Set your parameters, and have your Realtor start showing you houses.
When you get to this stage, be ready to make an offer.
- Get your prequalification mortgage approval letter from your lender and have it ready to go.
- Be sure the cash you set aside for down payment and closing costs is available and accessible.
A bit of advice: if you’re going to bring mom and dad in to see a house before you extend an offer, be sure to bring them to see all the houses you’re considering, not just the one you want to buy. Why? Because in order to appreciate what you appreciate about a house, they’ll need to be able to compare it to the same houses you’re using as comparison.
Get Your Move On!
Following these 6 steps for first-time homebuyers will help you begin the home buying process as prepared and confident as possible. For more tips for first-time homebuyers, be sure to check out next month’s installment of Real Estate 101: Tips for First-Time Homebuyers.
In the meantime, set up an appointment with your LW Reedy Realtor today! We can help you get started on these first six steps of the home-buying process.