The Down And Dirty First Time
Home Buyer Checklist
Are you a first time home buyer wondering how on Earth you'll be able to buy your first home? Wondering what steps are involved and what is essential (and not) to get you to the promise land?
Don't worry, by the time you finish reading this article, you'll be well on your way to buying your first home. First, let me start off by saying I am no housing expert. As of this writing, I've just recently purchased my first home, and I've also read Home Buying For Dummies
. But other than that, that's the extent of my knowledge.
With that being said, I know exactly what you are thinking and feeling right now. It was only a short while ago I was in your same situation.
I want to tell you the real truth about what home buying is like. That's what this first time home buyer checklist is for. It will tell you ONLY what you need to know to purchase your first home.
I know how easy it is to get overwhelmed in the beginning of the home buying process. But let me assure you, there are only a few critical steps you need to do to get you in your dream home. The dream home that I'm sitting in right now :-) ...
1. Getting a Top Notch Real Estate Agent
When buying your first home, by FAR the most important step in your home buyer experience is getting a great Real Estate agent! At least it was for me.
If you get this step right, your real estate agent can help you with every other step in the home buying process. Take my word for it, search for a real estate agent before doing anything else.
I made the mistake of looking for houses for hours on zillow.com and other Web sites. Chances are, your real estate agent will have private access to sites that are FAR better than Zillow. Zillow is great, don't get me wrong. But it's not up-to-date. My house is still "for sale" on Zillow even though I've been living in it for a month now!
The rule of thumb with real estate agents is to find and interview at least 3 before you decide. I probably wouldn't disagree with that strategy. However, I interviewed one, fell in love, and never bothered interviewing another person. And after buying my home, I haven't regretted that decision since!
However for my next home, I'll probably interview a few more people. Just to see the differences, and to really take my time since I now realize the importance of getting a good real estate agent.
I found my real estate agent through homegain.com. Which was a really great resource for my area. It listed about 15-20 agents, which I set up interviews with three of them (of course, I never made it to the next two interviews :-) ). Definitely check it out and see how many agents are listed in your area.
What to look for in a real estate agent?
I would say someone you like and trust. Someone who is going to bend over backwards to make sure things get done (there will be a lot of things!). Also, someone who educates you on the home buying process and is more than happy to answer any questions you have, in a quick and timely fashion.
2. Get A Dependable Lender
One of the first things your real estate agent is going to tell you to do is to get a lender. The reason being is that you'll need to get "preapproved" for a loan, which basically means they will look at how much you make and say, "Yes, this person is qualified to fork over all of this money to buy a house worth $200,000 (or whatever price range you're looking for).
Your real estate agent doesn't want to waste time looking at million dollar homes if you can only afford a $150,000 home.
Once you get preapproved, I would either ask your lender or your real estate agent what kind of monthly payments you can expect for the price range house you are looking for. This will give you an idea of how much you can afford.
Important Side Note - Monthly apartment rent payment and monthly house payment is NOT the same. Don't get excited when you realize your monthly house payment is going to be equal or less than your rent payment. You have to add in extra costs such as property taxes (usually a few thousand a year), homeowners insurance, etc. So ask your lender or real estate agents what the TOTAL monthly cost will likely be.
OK, so what to look for in a lender?
Your real estate agent will likely have 1 or 2 lenders they recommend. Keep in mind, they likely aren't recommending them because they can get you the lowest rate. They are recommending them because they can get the ENDLESS amount of paper work (more on this later) done in a quick and timely fashion.
For your first home, this might not necessarily be a bad thing. Unless you plan on living in your first home until the day you die, paying one or two tenths of a percentage point extra on your loan interest rate isn't going to be a life-changer.
I went with the lender my agent recommended, and even though I think I could have gotten a little bit better loan rateif I would have went with an online lender, I'm glad I didn't! There's a TON of things your lender has to do in a short period of time in order for you to buy your first home, and having someone reliable is something you will appreciate greatly when all is said and done. Trust me!
3. Enjoy The Fun Part - Looking At Houses
The next step in the first time home buyer checklist is looking at houses. This is the REALLY fun part. Call or email your real estate agent and tell them what houses you want to look at and on what day. Once again, our agent had some up-to-date software we could look at online to find houses in the area.
It's a better use of everyone's time if you choose 3-7 houses and look at all of them on the same day. This also helps you when comparing houses because they will all be fresh in your mind.
What can I say, enjoy this part! With each house you enter, you could be walking into your first home! If you aren't having any luck, don't commit on a house that you aren't in LOVE with. The second I walked into my first home for the first time, I knew this was the one. My real estate agent said my eyes were sparkling and I had a huge smile on my face.
The same thing will happen to you. Deep down you will know when you've found "the one."
4. Put Down That Offer
OK, you've found your dream home. In fact, you may have even found another home that is darn near perfect as well. It's time to put in your offer.
This is where your real estate agent can be worth their weight in gold. They will research the house, look at other homes that were bought in the area (if your agent keeps saying "comps" this is what they are talking about :-) They are referring to "comparables", aka similar homes purchased recently in your area)
Your real estate agent will give you advice on what your first offer should be. Use their advice and make your own decision. It doesn't have to be what your real estate agent said, although they are much more experienced in this sort of thing than you are.
There's a 99% chance the seller will refuse your first offer, but they will likely come back with a counteroffer. This is where you get into the nitty gritty of how much you are going to buy this home for. This part can be stressful, because you've fallen in love with the house, and you don't want another buyer to come in and take it.
For my home, I immediately accepted the counteroffer, even though I contemplated trying to get it for $1,000 less. I ended up making a GREAT decision because another buyer was filling out the paperwork to put an offer down whenever I accepted. I would have had to pay a LOT more if I hadn't acted quickly. I would have been in a bidding war, which is never a good thing!
So my advice, once the price is right ( or pretty darn close) act quickly and accept. It will pay off, and be a huge relief.
5. Get an inspection
You'll have an endless to-do list after you have accepted the offer on your home. One of the first steps though will likely be to get an inspection.
Everyone will highly recommend you get an inspection, and it's absolutely true! Here's why...
An inspection will cost you a little bit of money (mine was around $350), but it more than pays for itself. The inspector found around $500 worth of fixes that needed done. And my real estate agent negotiated that all $500 worth of expenses get paid for by the seller, and they accepted!
I should note that my inspector said that my house was in one of the best shapes he had ever seen as an inspector, and there was still $500 worth of stuff that needed fixed!
This small investment paid off for me, it's a near certainty it will pay off even more for you. So get an inspector. Chances are, your real estate agent has one they recommend. Just stick with that one. It's simple, and it's one less headache you don't have to worry about.
6. Get homeowners insurance
Another step in the process is to get homeowners insurance. My only recommendation here is to call up your whoever your car insurance is with and see if you can get a deal by combining it with your homeowners insurance.
I saved hundreds of dollars a year by doing this!
7. Be Ready To Provide Every Piece Of Paperwork You Can Possibly Imagine
OK, this is the REALLY not fun part of buying a home. Your lender is going to ask you for more things than you can possible imagine!
They'll ask for copies of checks from 3 months ago. Bank statements. Proof of employment. If people are helping you out with the down payment, they'll have to sign "gift letters."
It's an absolute nightmare what they will ask you for to be perfectly honest. I even had terrific credit, was putting down 20% on the home, was more than qualified to pay for the home. And it was still a nightmare!
I was sometimes making 20 phone calls a day, trying to get things from my bank and employer that my lender needed.
All I can say is, make SURE you follow my advice in step 2 and get a dependable lender. I can't imagine what it would have been like if I tried to save a few bucks with an online lender. The lender I chose did as much paperwork and phone calls as they possible could for me.
They truly were a lifesaver. And I'm 100% glad that I chose them.
My advice is to just be prepared for this sort of thing. It will all get taken care. It will be a little stressful, but it's all worth it because the final step...
8. Moving Into Your New Home
Sign the five billion papers you will have to sign at closing, then take those house keys (and garage opener if you have one). Your journey is finally complete!
It's time to paint. Time to move in. Time to enjoy being a first time home buyer. It's truly a great and exciting journey that is more than worth it in the end.
I wish you the best of luck on your home buying journey. I hope this first time home buyer checklist was useful for you. If you have ANY questions...
Ask your real estate agent! :-)
They know WAY more about this stuff than I do!
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