To the uninitiated, the idea of buying a home may seem daunting. Fortunately, finding a comfortable place to settle down is much more achievable (and a lot less scary) than it might first appear. Whether you’re teaming up with a partner or flying solo, we’ve put together a guide that will give you the confidence you need to get on the property ladder.
Step 1: Start your search early (and get saving)
Are you planning to save a few more dollars before embarking on your home buying journey? Excellent – this is very sensible. On top of down payment, closing costs, and administrative fees, financially responsible buyers tend to save at least three months’ worth of emergency living expenses before they consider buying a home. If you’re anything like the average American, you may not reach this stage until you’re in your mid-30s.
However, it’s still worth scouring property sites to develop an understanding of the property market. Property nerds can better navigate the buying process when the right time comes along, and you’ll be better able to spot a good deal when you see one. What’s more, property browsing can be fun if you’re a fan of interior design and provide excellent motivation if you struggle to save money!
Step 2: Prepare your finances
As soon as your savings are looking healthy enough to buy a home, it is worth preparing your finances. Your credit score, for example, could impact your chances of securing a decent mortgage, so it is worth paying off outstanding debts and avoiding taking out too many new loans.
Similarly, it is a good idea to conduct a spending review to ensure your buying plans are realistic. Check your bank statement to ascertain how much money you spend on different things throughout the month. Categories should include everything such as student debt payments, clothing, car maintenance, utilities, groceries, entertainment, and more. Once the stats are in front of you, work out a monthly mortgage budget and, if possible, cut out non-essential spending.
Step 3: View some properties in person
Once you have a location and budget in mind, you can start your search in earnest and organize some viewings. Usually, you can do this with a friendly real estate agent who will help you through the rest of the buying process.
Start by thinking practically rather than looking at the prettiest or most whimsical properties. If you have a partner and kids in tow, you may wish to look for a townhouse or a large family home with several bedrooms. If, on the other hand, you’re moving on your own or with one other person, you could consider a condo or inner-city duplex.
It is also worth making a list of priorities regarding any special features you need or desire. These could include everything from a large yard to high-quality kitchen appliances. The more priorities you can tick off, the more confidence you can put in a property!
Step 4: Find a suitable loan
There are many different loan types and lenders out there, each offering different terms and conditions. To enhance your chances of securing a good deal, it is worth researching and comparing lenders. Some states offer financial assistance for first-time buyers and people in certain situations, so double-check whether you are eligible for any grants or schemes.
Step 5: Negotiate with the seller and order a home inspection
Once you have found a property that you love, you can work with your real estate agent to negotiate a fair price with the seller. When you reach a deal, the property will go into escrow, the window of time in which you complete the buying process.
Usually, purchase offers are conditional on home inspections to alert buyers to any structural damage or repair costs. Again, your real estate agent will help you to organize this and will offer helpful advice if any issues crop up in the inspection report.
Step 6: Close the deal
Congratulations! You’re almost there. Once you and the seller have established a fair price, you will need to sign a rather hefty amount of paperwork to close the deal. You may need to have your home appraised by a third party if your mortgage company requires it, on top of a title search to ensure that only the seller has a claim over the property.
You will also need to pay closing costs such as title insurance, taxes, surveys, real estate fees, and more. Don’t worry if this sounds like hard work – if you have a professional real estate agent on your side, you’ll fly through the process.