Whether it’s your first time buying a home or it’s been a few years since you last bought one, knowing where to start is your first step towards finding a home that fits your needs.
Save for a down payment
The amount of money you’ll need for a down payment depends on the type of loan you choose and the price of your home. Some conventional loans are specifically aimed at first-time home buyers with good credit and a 3% down payment and others are available to borrowers with 0% down.
Talk to a local home loan expert
There are a lot of options for financing your new house. Before you get too excited about a new home, you’ll want advice from a pro. Find a local home lender with great reviews and a solid reputation and set up a meeting with one of their loan officers. They’re experts in finding the right loan for their clients’ needs. You’re under no obligation to work with any lender you speak with and your meeting time is free. The information they’ll provide to you will let you know what type of loan you’re eligible for, first-time home buyer assistance programs for your state you could take advantage of, the approximate interest rate you would pay, and the price range for a house you would be able to afford.
>> Mann Mortgage has a rating of 4.89/5 stars with more than 15,000 reviews on SocialSurvey.
Get a pre-approval letter
When you’re ready to start home shopping, ask your home lender to pre-approve you for a loan. They’ll pull your credit score and history, verify your income, check your assets, calculate your debts, and approve you for the appropriate home loan. Your lender will give you a blanket letter stating you’re approved for a loan up to a certain amount of money or they will write you a personal letter for the home you are putting in an offer for. Either way, the pre-approval letter lets the home seller know you are a serious bidder already working with a lender, so your financing should go through without a problem.
>> What happens when a lender pulls your credit?
Choose the right real estate agent
Find someone with intimate knowledge of the community you’re purchasing in. They should be able to answer questions about the housing inventory, schools, traffic, and much more. Ask for a referral from your home lender, friends, co-workers, and neighbors. You can even drive or walk around the neighborhood you’d like to buy in to find agents selling in the area.
You’ll know you’ve found the right agent when they answer questions quickly, work as a Realtor fulltime, close on deals, and are willing to educate you about the local market and homes you’re interested in.
Know what kind of market you’re purchasing in
When you find the home with the right size, location, age, and price range, the way you make your offer may depend on the type of market you’re in. Generally speaking, there are two markets: a buyers’ market and a sellers’ market.
If you’re in a buyers’ market: A buyers’ market means there are more homes available than people to buy them. This is great news for a buyer. You’ll have plenty of homes to choose from and you’ll have time to weigh the pros and cons each before you put in an offer. Offers with contingencies such as financing, home sale, or inspection will have a much higher chance of being accepted than they would in a sellers’ market.
If you’re in a sellers’ market: A sellers’ market means there are less homes available than people to buy them. Be prepared to act very fast when you see a house that meets your needs as it’s possible a home seller will receive multiple offers within days of the house being listed. Be prepared to make multiple offers on homes before one is finally accepted. It’s going to be tough to get a house and you’ll be competing with other very serious buyers (some people make offers in cash -meaning they don’t have to finance the house, they have the money to buy it outright). Talk with your Realtor about what you can do to make your offer more likely to be accepted. Some common tactics are:
- Have a home loan pre-approval letter.
- Don’t plan on negotiating – make your first offer strong.
- Waive as many contingencies as possible.
- Write a personal letter to the seller when you make an offer.
- Put an escalation clause on your offer. This means you make an initial offer but also set a maximum offer. If the seller receives another offer that’s higher than your initial offer, your offer will increase by a set amount to beat the other offer up to your maximum price.
Get ready for closing
If your offer got accepted and all the contingencies were removed, you should be ready to close. Closing is the final step in transferring ownership from the seller to you. Your home lender will originate and underwrite your loan and the title company will prepare a lot of paperwork for you to sign.
When you’re ready to talk to a professional loan officer, contact your local Mann Mortgage office. Our loan officers are very familiar with helping first time home buyers understand their loan options, the local housing market, and how to finance the right home.