I love owning a home. But I hated buying it. The first time you buy your home will be stressful and hectic, there’s no two ways about it. Some people get halfway through and quit, the natural demands of the process combined with worries about taking on the responsibility. I’m not here to diminish any of this. What I will say is that understanding what is to come really helps. Talk to people you know who have gone through it and come out on the other side. See what parts of the process they were happy with, what they wish they could’ve done better. And do your own research. Below, we’ve got an infographic that can help you prep for every key step of the mortgage process.
⅓ of homebuyers are doing this process for the first time. Most people look at about 10 homes, for what typically takes about 10 weeks, before selecting the home they want. But before you can proceed on what appears to be a perfect home, you’ll have to do a few things: 1) Know what you can afford, 2) Check your credit score and improve it if necessary (this will help you secure a better interest rate, saving you A LOT of money), 3) Get pre-approved by your bank, so you know what financing you can secure, 4) Save up for a healthy down payment, usually around 20% of the home’s value, and 5) Find a realtor you like.
Once you’ve made a successful offer on the perfect property, you’ve got to get into the weeds of complex finance! You’ll have to select what kind of loan you’re applying for, usually choosing from five options (described in the infographic below). Next, choose whether you want a fixed or adjustable rate. Fixed rates are easy to understand: they never change, so you always know what you’ll pay. Adjustable rates may drop over time, and they usually start small. This may be a good choice for someone not planning to be in the home for very long.
Next, you’ll want to get the home inspected by a professional. Make sure there aren’t any big problems that the former owner needs to repair before the home can be safely or legally sold. Then pick a closing date, figure out who is paying the closing fees (owner/bank or you), attend closing, move in, and wait for that first payment!
Of course, there’s a lot more to it than just this. You’ll have to answer a lot of phone calls, provide heaps of personal information, and communicate with loads of different folks who will be working to establish your credit worthiness and all the other complex aspects of buying a first home. Buying the first house is the hardest one you’ll buy in your life. You are likely starting out with fewer resources than you’ll have later in life, so there will be a lot more discussion with the bank or other lending institution to make sure you’re qualified. But in the end, you’ll have a home, you’ll be building equity, and the whole thing will be worth it. Prepare yourself and go for it!
Please include attribution to http://www.americancapitalmortgagegroup.com with this graphic.