Buying your own home is a huge milestone that many people dream of accomplishing. But it comes with a lot of costs and obligations that you should be prepared for.
Don’t start looking at homes without first saving enough for a down payment. It’s also a good idea to make a list of your non-negotiable needs and wants.
1. Get Pre-Approved for a Mortgage
Getting pre-approved for a mortgage before you start looking at homes is an important step in the home-buying process. It helps you determine what type of home you can afford and lets sellers know that you are a serious buyer.
During the pre-approval process, lenders will check your credit and verify income and assets. Depending on your circumstances, this can take a few days or even a week or more. Having documentation ready, like bank statements, tax forms and pay stubs, can help speed the process.
It is also a good idea to monitor interest rates, as they are constantly changing. Once you are approved for a mortgage, the lender will provide a Loan Estimate within three business days of receiving your application. The estimate will detail the loan terms, including the amount borrowed, interest rate and estimated closing costs.
2. Create a Budget
Creating a budget is a vital part of the home buying process. It is important to account for all of the extra expenses that come with owning a home, including the cost of moving, furniture, and household appliances and supplies. You will also need to factor in ongoing expenses, like utilities and lawn care.
To help you create a budget, you can use an app such as SoFi Insights, which allows you to link your bank accounts and track your spending. It will help you make sure you have enough money left over to save for your new home or other goals, like a vacation!
3. Find a Real Estate Agent
A good real estate agent does so much more than attend home-buying events or take home buyers to open houses. They have expertise in local market trends, know the best ways to finance a home, and can help home buyers avoid overpaying for a property.
They also can help home sellers sell their homes quickly, by running a comparative market analysis and providing recommendations for what repairs will yield the best return on investment. Plus, a good real estate agent will have connections with trusted professionals such as home inspectors, appraisers, and mortgage lenders.
You can find an expert to work with through StreetEasy’s Expert Match, which matches you with vetted agents whose experience suits your needs. Just click on
Schedule a Showing or Ask an Expert on any listing to connect with a top agent.
4. Make an Offer
When you’ve found the house of your dreams, it’s time to make an offer. Your real estate agent can help you determine how much to offer based on your budget, and how competitive it is in the market.
Depending on the market, you may want to include an earnest money deposit that shows you’re serious about the offer. This money will often be deposited into escrow and deducted from what you ultimately owe on your mortgage.
In highly competitive markets, you may need to come in well above the asking price, especially if you want to live in a desirable neighborhood or city. This can be a tricky balancing act for buyers, and should always be done with caution. In most cases, overbidding will only push you further out of your budget and leave you with less equity in the home.
5. Get a Home Inspection
Home inspections are a crucial part of the home buying process. They reveal hidden problems that can cost you money down the road. They also help you determine whether a house is worth the investment.
The best time to get a home inspection is after you make an offer and it has been accepted. That gives you a chance to ask the seller to repair any issues that come up during the inspection.
A home inspector can find illegal additions, reveal the age of critical equipment like boilers and furnaces, and give you a good idea of what to expect in terms of future costs. Your realtor may have recommendations for inspectors they really like, but it’s a good idea to do your own research too. Inspection is good for many reasons and you can benefit from things like electrical safety tips or something that may need updating or repair on.
Investing in your home is important and that is why a home warranty is recommended for homeowners. Appliances in your home get used often and having the peace of mind to replace them will make life a lot easier in your new home. It takes away stress and anxiety of repairing those frequently used appliances.