Purchasing your first home can be exciting and overwhelming, especially if this is your first time going through the process. There are various steps in the homebuying process, and each step can vary depending on your state of residence. The following tips can help you in your process:
- Work with a Real Estate Agent: Realtors are extremely knowledgeable about home pricing in your area and are constantly checking the market to ensure the home you have your eye on is listed at a value that is fair and comparable to others just like it. Working with a realtor also allows you to find homes via the multiple listing service (MLS), an official and efficient online exchange for homebuyers and sellers. Perhaps the biggest plus of all: Realtors are professional negotiators! These professionals are hired to protect your interests and ensure you are getting a fair deal.
- Get Preapproved: This is the first step before you start looking for a home. The majority of sellers will not even consider an offer unless they can see an official preapproval letter from your mortgage lender or bank. Be sure to compare the various types of loans you may qualify for based on your circumstances and shop around for the best rate. It is important to note that getting preapproved does not automatically mean you will get financing, but it does let you know the top price point of homes you can afford.
- Save for a Down Payment and Closing Costs: The down payment is the portion of the purchase price of a home that you pay out-of-pocket (as opposed to borrowing). Paying at least 20% allows you to avoid paying for PMI, or private mortgage insurance. If putting 20% down is out of reach, there are other conventional and government loan options which require as little as 3-3.5% down. Nerd Wallet does a great job of listing the multiple types of loans available and how much money you will need to put down should you qualify for any of them. It is also a good idea to set aside money for closing costs. If you are a first-time home buyer, you may be scratching your head. Closing costs are additional fees that cover the cost of important steps in the home-buying process, including: appraisal, home inspection, attorney fees, credit report and homeowner’s insurance. On average, closing costs are about 3-4% the purchase price of your home.
Purchasing your first home can be stressful and sometimes surprising. The closing process can also be a bit confusing. (Be prepared to sign a lot of paperwork!) It is important to know that the closing attorney or professional you work with is not only experienced in their field, but truly dedicated to protecting your best interest. At Simple Title Closing & Escrow PLLC, we provide real estate legal services for buyers and sellers like you, so your closing process is seamless.