The Process for First Time Home Buyers

A home will almost certainly be the biggest purchase of your life, but if you aren’t already a homeowner, the process of buying your very own property can be somewhat daunting. There is a lot more to consider than simply what property you would like to buy, and it is crucial to get it right if you want to get onto the ladder and not end up paying more than you need to.

If you are a first time home buyer, here’s what you need to know about the process.
 

Get your finances in order

The first thing any first time buyers should do is to get their finances in order before committing to purchasing a property. This is because, unless you are buying somewhere cash, you will need to take out a loan to afford your new home. Lenders look much more favorably on buyers who can show that they are financially responsible. This means not spending more than you can afford, keeping debts down, and saving as much of a down payment as possible, as the larger this is, the less you may need to borrow. It also shows that you are committed to the purchase and meeting your mortgage obligations each month.

You should also consider your credit score very early on in the process. This is important because your credit score will help lenders to decide how trustworthy you are and what interest they will charge you for borrowing. Typically, the higher your credit score is, the better your lending options will be, and the less you can expect to pay in interest.
 

Find out how much you can afford

Easily one of the most important steps in any home purchase, it is essential that you figure out how much you can afford before you start looking at properties. Otherwise, you could fall in love with a location or home that is outside your budget. Exactly what price range properties you should be looking at will depend on several factors – your down payment, your income, and your current outgoings. 

The best way to discover what you can spend is to get pre-qualified for a homeowner loan with your preferred lender. They will review the information that they ask you to provide and tell you how much you can be lent.
 

Get pre-approved for your homeowner loan

Once you know how much you can afford to spend, it is a good idea to get preapproved for your mortgage. This will provide you with a document that you can show sellers that proves that you can finance a purchase and, in the case that there are several parties interested in the same property, could put you in a more favorable light than others who don’t have the same guarantee.
 

Find a great real estate agent

Your real estate agent will be your most important partner when it comes to buying your first home, as their experience will be invaluable. Not only will they be experts on the area in which you are interested in buying and how the property market is behaving there, but they may also know which properties to avoid and which are coming up for sale before they even hit the market. They will be able to offer an unbiased point of view and keep your feet on the ground, preventing you from following your heart instead of your head. They also have superior negotiating skills and will help you to decide what you should offer and the maximum that you should pay. And if you needed any more persuasion, using an agent won’t cost you a cent – they earn a commission that is paid by the seller of the house.
 

Get a home inspection

Purchase offers are usually subject to a home inspection which will involve a thorough check of the property for signs of structural damage or other things that may need fixing. Your real estate agent will help you organize this and will advise you, based on the findings, whether your offer should stand, be reduced, or in the event that the property isn’t financially viable, be withdrawn altogether. You can also ask the seller to fix issues before you choose to close on the sale.

In addition to organizing a home inspection for your benefit, your lender will also want to have the property independently appraised. They will want to be sure that you are paying a fair price for the property because, in the unlikely event that you default on your mortgage, they will want to know that they can sell it to reclaim the amount that you owe.
 

Closing the sale

Your property purchase will close once all parties are happy and you sign all of the paperwork needed to finalize the purchase. Once the paperwork has been returned, your lender will settle the outstanding amount with the seller, and you will be able to organize moving into your first ever home!

For more advice on the process for first time home buyers, don’t hesitate to contact Pacific Real Estate Group today.