A home is the biggest purchase you’ll ever make (unless you overdo it by buying works of modern art). You may feel nervous or excited about purchasing a home. . . and I may have a lot of questions:
Is there a homeownership program? What is the buying process for first-time buyers?
Do not worry. We are here for you. In this first-time homebuyer’s guide, we’ll walk you through everything you need to know to be successful on your home ownership journey.
Let’s start by looking at different homeownership programs. The home buying process for first-time homebuyers
Whether you’re buying a home for the first time or for the seventh time, the buying process is roughly the same, with a few differences. But as a first-time home buyer, you really have to be in your game to not make any mistakes.
Here’s an overview of the steps you need to take before you buy a home.
Calculate How Many Houses You Can b=Buy.
Your home payment (including principal, interest, property taxes, home insurance, PMI, and homeowner’s association fees) cannot exceed 25% of the amount you received the home for. If your payment is more than that, you will fall into housing poverty. We want you to own your home, not the house you own. How many houses can I buy? calculators can help you determine exactly how much you can afford. How many houses can I buy? What is your monthly net salary?
Save For Upfront.
Try to save at least 20% of the house price upfront. As a first-time home buyer, you can only save 5-10%. But that means you’ll have to pay for private mortgage insurance. Also, don’t forget to save on closing and moving costs.
Identify Your Favorite Neighborhoods.
Instead of scouring the entire city for homes, narrow your home search to just a few areas. Remember that real estate prices depend on location, location, location. More desirable neighborhoods will have more expensive homes, so don’t indulge in an area you can’t afford. A good real estate agent can help you find your dream home and neighborhood.
Get Pre-approved For A Regular Fixed-rate Loan For 15 Years.
A 15-year fixed-rate mortgage is the best mortgage for first-time homebuyers because you’ll pay much lower interest rates over the life of the loan. Avoid FHA, USDA, and VA loans. Use our mortgage calculator to find out how much you have to pay monthly (tax and insurance included) on a regular loan. Getting pre-approved for your loan before you buy it is handy when you’re ready to make an offer to buy a home you love.
Find A Professional Real Estate Agent.
You want an agent you can trust, one that is experienced and can guide you through every step of the home-buying process. Just because Uncle Ron is a part-time agent doesn’t mean he should be your agent.
Meet With An Agent And Discuss Your Must-have List.
Working with your agent will help you find the type of home you really want and can afford.
It takes time to find a home, so make it a habit to check listings online. About 97% of home buyers search for homes online. Most buyers search for eight weeks and make nine visits before finding the home they’re buying.5
Make An Offer To Buy a Home.
Once you’ve found an affordable home you love, count on your real estate agent to help you make a competitive offer and negotiate with the seller for the best price. This is also where your pre-approval comes in handy. This shows the seller that you’re serious about your offer because you’ve already taken the first steps to secure financing.
Pay The Deposit And Start The Mortgage Process.
Once your offer has been accepted, you will pay a deposit called a deposit. Then talk to your lender to begin the mortgage approval process.
Inspect And Appraise Your Home.
A home inspection will let you know any significant or minor issues the home may have, and your agent can negotiate for the seller to pay for some or all of the repairs. An appraisal will keep you from paying too much for a home.
Be Patient While The Lender Completes Your Loan Application.
There is a lot of paperwork to complete to get a mortgage and it usually takes 30 days or more to get to the closing date.
Start Looking For Home Insurance.
Your lender will require you to have insurance before financing your home. Set up a policy with one of our Ramsey Trusted insurance agents.
Close your house, finally!
Go through all your closing expenses, sign a mountain of paperwork and you’re officially the new owner with the help of your agent.