Are You Ready to Buy a Home?
Does your noisy apartment complex or skyrocketing rent have you wondering, “Can I buy a home?” If you’re a first-time homebuyer, asking yourself a few quick questions now can save you time, money and sleepless nights down the road.
First-time homebuyers: Answer these easy questions to see if you’re ready — and eliminate surprises during the home loan process.
What are Your Home ‘Must-Haves’?
Making a list of your desired home features can save serious time during your house hunt. And if you’re purchasing with your spouse or significant other, it can serve as a discussion starter to make sure you’re both on the same page.
Some questions to consider:
- What area do you want to live in?
- Is the quality of the schools important?
- Are you OK doing some fixing up, or do you need a newer build?
- Would a condo fit your needs just as well as a house?
- Are you ready to spend your weekends maintaining a large yard?
- Do you have pets who require a fence?
- What’s your absolute minimum number of bedrooms and bathrooms?
Talking through these starting points will help your real estate agent tailor a search that meets your needs.
What are the Required Costs?
Unfortunately, there’s more to home buying than your down payment and monthly mortgage payment. Here are some of the one-time costs you’ll be responsible for during the buying process:
- Earnest money: After you find the right house, you’ll give this deposit to the seller to show them you’re serious (and convince them to take the home off the market).
- Closing costs: You’ll pay these at your closing. They’re convenient because they let you pay several fees at once (appraisal, credit report, loan origination fees, home insurance, title insurance, and more), but can add up quickly.
- Escrow account: You may also need to make a deposit to this account to take care of monthly fees like homeowner’s insurance and property taxes.
- Furnishings: Plan on needing to buy at least a few items for your new space.
So how can you know if you have enough saved to start your search? Closing fees typically cost about 3% of your home’s purchase price. While a seller may agree to pay a portion of your costs at closing, it will depend on your real estate agent’s negotiations. Some lenders will let you roll these costs into your mortgage, but it will result in extra interest.
Who Should You Work With?
A real estate agent is a cru resource when home hunting. They’ll help set your first-time homebuyer expectations and share their valuable knowledge and advice on everything from home prices to hot neighborhoods, how to negotiate with sellers, and more.
The other half of your homebuying dream team is an independent mortgage broker. They shop multiple lenders and work to quickly find you a loan option that fits your financial needs, which often means a lower monthly payment. A mortgage broker also guides you through the closing process to make sure there are no surprises.
Do You Have a Set Timeframe?
In today’s world of tracking packages across the country, it can be frustrating to realize that homebuying doesn’t follow a strict schedule. Homebuyers typically look at dozens of houses over roughly 10 weeks before making an offer, followed by a “contract to closing” process of 30-45 days. This includes everything from submitting an offer and negotiating to securing your loan and getting a home inspection.
Our advice? This isn’t something you want to rush. Take your time house hunting and find something you’re truly satisfied with.
Only You Know if You’re Ready
No matter how noisy your apartment complex is, it’s important to take some time and go through these questions before you start house hunting. With a little honesty and discussion, the answer to your question “Can I buy a home?” will become a lot clearer.
If you’re ready to start the homebuying process, search for a local mortgage broker in your area to get pre-approved.