How To Prepare For Your First Home
Buying your first home is an exciting accomplishment. However, there are several vital steps to take in the preparation process. When you’re dealing with a competitive market, it’s important to plan ahead as much as possible. With that said, here is a short guide on how to prepare for your first home.
Figure Out Your Budget
First off, you need to decide what your budget looks like. This is going to be especially important for managing your down payment and closing costs. A down payment on a home typically requires somewhere around 5% of the total cost. Plus, closing costs add another 3% of the loan. With that said, a $250,000 home will need roughly $20,000 at closing for down payments and legal fees. Essentially, you need to factor this into your budget when preparing for your first home.
Find A Loan Program
The earlier you can start researching loan programs, the better. Basically, you need to be prepared for things to move fast once you’re ready to buy your first home. Different loans will come with different options. Some may offer low down payments, for example. Research loan options as soon as you are able so you can figure out what’s best for you early on in the process.
Get Pre-Qualified And Pre-Approved
These are absolutely crucial steps to do. Pre-qualification refers to sending your financial information to a mortgage lender. They will use this information to see if you are eligible for financing. On the other hand, pre-approval is a completely different step. This is a mortgage application document that has your tax returns, W2s, financial statements, and more. The lender then uses this to determine how much you are able to afford on your first home. Many realtors will not work with you unless you have been pre-approved.
Hire A Real Estate Agent
Finally, it’s important to remember that it’s best not to go through the buying process alone. Hiring a trusted real estate agent makes all the difference. They can help you through all of these important steps and make sure your closing is smooth and easy. In a nutshell, their knowledge and expertise should always be implemented.
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