Steps to Buy a Home for First-Time Homebuyers
One of the most important financial decisions most people ever make is the choice to buy a home. If you are thinking about buying your first home, you may be intimidated by the process. Never fear -- we have put together a first-time homebuyer guide to help answer all the questions you have about the preparation, process, and perks of homeownership.
What is Different for First-Time Buyers?
As a renter, you have probably taken for granted that most of your rental homes have some features you like, others you don’t. As a first-time homebuyer, however, you’ll have far more preferences than you ever thought possible about a range of details from design elements to financing options.
Here are some of the things you may be thinking about as you begin preparing to buy your first home.
Resale vs. New Construction
The first thing you should think about as you prepare for your home search is whether you are interested in new home construction or you want to buy an existing home. You may have questions about the cost of building a home vs. buying, as well as how long it takes to build a house and what designing a home is like from a process perspective.
Whether you are working with a real estate agent or are attending open houses in the area, you will want to consider your comfort level with home repairs and whether a resale home in your market can provide the upgraded finishes and systems that you are looking for. In addition, you may find that a new construction community offers amenities that you prefer over those found in older neighborhoods.
One of the most intimidating aspects of the home buying process is the negotiation, both during the initial offer and following the home inspection. Some home buyers have a professional background that gives them more comfort with negotiations, while others prefer to have a real estate agent do the negotiating on their behalf.
When you buy a resale home, you will have to hire a home inspector in order to have the home’s systems and structural elements checked. This inspection can bring up a host of concerns, initiating a new round of negotiations for repairs or further inspections by specialists in roofing, HVAC, or foundations.
The home financing process is probably the most frustrating part of most home purchases. Finding the right lender, gathering paperwork, and putting together the money for down payments, earnest money deposits, and closing costs can all create stress during the home buying process.
Many builders offer in-house financing that streamlines the mortgage application process, allowing you to circumvent some of the difficulties of obtaining financing. In addition, the better condition of a new home can simplify the appraisal and approval process in many cases.
Steps Every First-Time Homebuyer Should Take
It is important for you to develop an action plan to streamline your home purchase process and simplify your decision-making. Here are some steps to get you started.
1. Begin Early
Even if you’re not yet ready to purchase your home, it’s a good idea to start thinking ahead to your eventual real estate goals. Stop by some open houses, check out neighborhoods, and talk to friends and relatives who have gone through the process of purchasing a home. The more insight and understanding you develop up-front, the easier your process will be.
2. Get Your Financial House in Order
Look ahead to prepare for the home financing process by checking your credit report for errors, working to optimize your credit score, and saving more money than you think you need for the down payment, closing fees, and any other additional expenses. Pay down debt and gather records including your prior years’ tax returns and income statements so that you will be ready to work with your lender when the time comes to apply for a mortgage.
3. Work with a Trusted Advisor
Whether you work with a real estate agent or a wise mentor or family friend, it is important for you to have someone to talk to who can give you advice and help you think through your options. Such an advisor can help you make better decisions that are good for your financial and personal goals -- both short-term and long-term.
If you are thinking of buying a new home and need more information about new home builders in your chosen market, check out Pulte’s map to find the best communities in your area.
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