What Is the Homebuying Process?
Are you buying a home for the first time? If so, congratulations! What an exciting time. That said, the homebuying process can be a bit intimidating at first. Which is why we’ve put together this quick first-time homebuying guide. Read on to learn the simple steps you need to take if you’re planning on buying your first home.
Show Me the Money – What’s Your Budget?
Our first tip in the homebuying process is to determine your budget. Be realistic about the price range you are looking for in a home. Stick to a firm number. If the house is going above how much you’re comfortable spending, don’t stress – they’ll be more. And if a home is under your budget, but is in dire need of repairs or updates, you’ll have to weigh the pros and cons of what you’re willing to financially put into fixing it up.
The closing process will also add up with other fees and costs during the homebuying process. Remember to take that into consideration when planning on how far you want to stretch your dollar.
The Mortgage Process
Getting pre-approved will also help you not only with your budget but will give you a much better idea on the max you can spend on a home. Working with a lender or broker will help determine what rate you’re pre-approved at based on your income, debt, etc. Don’t be afraid to shop around and explore your mortgage options as well.
Here’s another great tip: check and strengthen your credit score. There are tons of free credit score checking software systems that you can use. Easy ways to increase your credit include paying your credit card statements in full each month, keep your credit usage low, and limit your requests for new credit (i.e., opening any new accounts like a car or other loans).
Find a Local Real Estate Agent
Our next tip on the first-time homebuying process is to find a real estate professional! Not only do they listen to your house wants and needs, but they also represent you during the entire homebuying process. Whether that’s through showing you homes, helping you in negotiations, or teaching you about the entire homebuying experience, we couldn’t recommend finding a real estate agent more! They are true lifesavers during the process, particularly for first-time homebuyers.
If possible, pay for the home inspection. This prevents you from hidden repairs and problems that might be within the home or on the property. Here’s a life example for yours truly. When my husband and I were shopping for our first home, we found a great starter home within our budget. Thanks to our real estate agent, she found us a fantastic home inspector. Did we want to pay that additional cost (since we were on a very, very tight budget)? No. Was it worth it? Absolutely. The home inspector was beyond thorough with the home we were ready to buy.
And what did he find? About $30,000 in repairs and updates that we couldn’t see with our own eyes. Mold. Bad wiring. Roof holes. Leaks in the ceiling. You name it, he found it. That additional $30k was NOT in our budget and we passed on the home. With zero regrets.
Title Insurance, Escrow, & Moving In
To add another real-life story, my husband and I also purchased title insurance when we closed on our starter home. Two years later when we refinanced, the settlement company found a mortgage issue on the property from about 15 years prior. That unpaid second mortgage would have become our problem financially had we not had title insurance to cover this unexpected issue on the title of the property. Do yourself a favor and purchase title insurance.
Once you’ve found your home thanks to your agent, the home has been inspected, and you have purchased title insurance, it’s time to go to escrow! This is an exciting time in the homebuying process as you are almost to the finish line.
After everything is all clear to continue and you have signed all the documents, it’s time to move in. Don’t forget to change your address with the post office and bank. Some settlement companies even offer a moving-in checklist!
And there you have it! Our top homebuying process tips for first-time buyers. Feel free to connect with our Madison Settlement Services team today to help you with your homebuying process.