How to Buy a House: 10-Step Home-Buying Guide

Table Of Content

• Mortgage Credit Certificates (MCCs) for first-time buyers
• How to Make a Household Budget
• Talk to a licensed loan originator
• Check you credit score
• State and local first-time home buyer programs
• Insider tips for first-time Los Angeles homebuyers
• How to Improve Your Credit Score
• Get the inside scoop on homebuying

Your appraiser will determine the market value of the home by looking at property values in the neighborhood and evaluating the home’s general condition. The home inspection will ensure the property is up to code and that the foundation and roof are structurally sound. Your home inspector will test systems like plumbing and electrical and provide you with a detailed report with the home inspection results. The seller will either accept, decline, or counter your purchase offer.

Mortgage Credit Certificates (MCCs) for first-time buyers

As a first-time home buyer, understanding the homebuying process and finding assistance programs can be overwhelming. However, with the right information and guidance, you can successfully find and apply for first-time home buyer programs that suit your needs. Several specialized programs cater to first-time home buyers in critical professions, such as education, healthcare, law enforcement, and emergency services. These initiatives acknowledge the vital contributions of these professionals and offer unique benefits to help them achieve homeownership. Your real estate agent or Realtor will guide you through the process, and in many cases, take the lead. You really shouldn’t begin shopping for a house until you know how much house you can afford.

How to Make a Household Budget

Be aware that even if you have been pre-approved for a mortgage, your loan can fall through at the last minute if you do something to alter your credit score, such as finance a car purchase. Sometimes a bank will give you a loan for more house than you really want to pay for. Just because a bank says it will lend you $300,000 doesn’t mean that you should actually borrow that much. You’ll learn a lot about the homebuying process during these classes. Plus, successfully completing one can qualify you for other perks, such as more competitive pricing and being able to use gift money toward your down payment and closing costs. Lenders require appraisals because they can’t lend out more money than a home is worth.

How to Buy a House: 15 Steps in the Homebuying Process - NerdWallet

How to Buy a House: 15 Steps in the Homebuying Process.

Posted: Tue, 19 Mar 2024 07:00:00 GMT [source]

Talk to a licensed loan originator

Remember, first-time home buyer programs are designed to make homeownership more accessible and affordable for moderate-income households. By taking advantage of these programs, you can reduce your down payment, secure a competitive interest rate, and receive tax credits that can help offset the costs of buying your first home. Some companies offer help with buying a home through employer-assisted housing (EAH) programs, often in neighborhoods close to where you work. Your real estate agent will submit your requests to the seller’s agent. If you’re buying a house that’s for sale by owner (FSBO), your agent will negotiate with the seller directly.

Preapproval lets your agent take you shopping with confidence because they know they can make offers on your behalf with confidence. Property taxes, homeowners insurance and maintenance are just a few of the additions you’ll want to plan for. You’ll also want to make sure you have enough money in savings to cover emergency repairs. Remember that you’ll be liable for any major repairs after your sale closes.

Plus, if you put at least 20% down on a conventional loan, you won’t need to pay for private mortgage insurance (PMI). For example, you’ll need to pay property taxes and maintain some form of homeowners insurance. Factor these expenses into your household budget when determining how much house you can afford. The specific amount you’ll pay in closing costs will depend on where you live and your loan type. It’s a good idea to prepare to pay 3% – 6% of your loan amount in closing costs.

Insider tips for first-time Los Angeles homebuyers

You’ve signed the papers and paid the movers, and the new place is starting to feel like home. Homeownership costs extend beyond down payments and monthly mortgage payments. Let’s now go over some final tips to make life as a new homeowner more fun and secure. Put out some feelers with your friends, family, and business contacts. You never know where a good reference or lead on a home might come from. When you’ve done the groundwork above, you’ll be in a prime position to shop for your new home with confidence.

Sweet also points out that sometimes buyers who are browsing internet websites looking for homes may get confused by the properties that are available. “A lot of real estate websites list homes that are auction homes or pre-foreclosures — these are homes that the buyer typically won’t qualify for unless they are a cash buyer,” Sweet explains. Once you’ve compared the Loan Estimates, you’ll pick the lender that works best for you and get a preapproval letter. While a preapproval proves that you have been tentatively approved to borrow a certain amount of money, it does not guarantee financing, since all preapprovals are subject to verification. Also, retirees often want to stay put (despite all the articles you see about downsizing or retiring in exotic locales).

Get the inside scoop on homebuying

Don’t go over your budget for a house, even if the house seems perfect for you. The right home is out there for you, so keep searching until you find a home that fits your budget and satisfies your list of must-haves. Once you’ve decided on the type of home that’s right for you, you can begin to prioritize which features you want in your home based on your needs.

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Canadian First Time Home Buyers on the Rise as Record Volume of FHSA Activity Soars According to Broadridge - Yahoo Finance

Canadian First Time Home Buyers on the Rise as Record Volume of FHSA Activity Soars According to Broadridge.

Posted: Mon, 29 Apr 2024 11:30:00 GMT [source]

Your agent will help you find homes that are currently for sale that could be a good fit for you. Your agent will also make sure that you cover all your bases while house hunting and avoid common house-hunting mistakes. In fact, in 2019, first-time homebuyers put down an average of 6.7% on their homes, according to the National Association of Realtors. In many states, first-time homebuyer classes come with additional perks, such as down payment grants or no-down-payment mortgages, so make sure to find out what’s available in your state. With the large amount of money that you’re putting into your home, you’ll want to make sure to take excellent care of it.

Numerous resources are available to make homeownership more accessible and affordable for first-time buyers. Many first-time home buyers don’t know this, but the seller almost always pays their own agent and the buyer’s agent. Regardless of the size of your down payment, it’s a good idea to put aside a little extra to cover closing costs and any repairs that your home inspection might reveal. Most homebuyers, with some exceptions, will need to have a down payment when purchasing a home. While 20% down has become the gold standard in homebuying (and will help you avoid mortgage insurance), in reality, you may not need to put down nearly that much.

When you receive your inspection results, review each item line by line and look for major issues. If a home has a serious health hazard (like lead paint or mold), ask the seller to correct the problem before you close. If you can’t reach an agreement, you may want to move on and consider other properties. Read over your inspection results with your agent and ask whether they noticed any major red flags. Use the Rocket Mortgage Home Affordability Calculator to get a rough idea of how much mortgage you can afford. They’ll also want to see a work history (usually about 2 years) to make sure your income source is stable and reliable.

Walk through the home and make sure the seller hasn’t left any belongings. Check your repair areas if you requested them and keep an eye out for pests. You may also want to double-check your home’s systems one final time to make sure everything is in working order.

FHA loans require 3.5% down, and some types of loans allow you to buy a house with no down payment at all. Government-backed USDA and VA loans let you finance 100% of the home price with no money down. Paying down any high-interest credit card debt, personal loans, or student loans before applying for a mortgage can also help increase your credit score and lower your debt-to-income ratio.

Be sure to review your loan documents carefully and ask questions if anything is unclear. This program also considers the income of everyone living in the home, not just the borrower. That means a buyer could qualify for a loan using income from parents or roommates.