No one prepares you for buying your first home, and you could be confused about what to expect. Some parts of the home buying process may be common sense, but others could be unexpected. It is important that you have a roadmap of the process before you start.
Get Your Finances In Order
The first step to buying a property is to get your finances in order. You need to start saving for a down payment as soon as possible because you are going to need one. It is recommended that you have at least 20% of the property value as a down payment before you look at a mortgage. Some mortgage lenders will want less, but as a first-time buyer, you are unlikely to be offered a lower down payment amount.
You should also get a copy of your credit report to assess what you can do to make it better. Your credit report is one of the factors that a mortgage lender will look at to determine how much they are willing to loan to you. If you have a poor credit score, you need to look at ways to increase this before you start shopping around for a mortgage.
You also need to have all of your financial documents on hand because your mortgage lender is going to ask you for this. You need to have your W2 statements for the last two years as well as tax returns, bank statements, proof of income and proof of employment. If you are self-employed, then you will need to provide proof of this as well. It is important that you have all of this on hand because it will allow you to get pre-approval for a loan smoothly.
Shop Around For A Mortgage
You should never take the first mortgage that is offered to you, and you need to shop around. You also need to consider the type of loan that will work for you. There are two types of loans available, and they are fixed or variable rates. The rates relate to the interest you pay with a fixed rate being the same for the entire mortgage term while a variable rate will change with the interest rates.
When you look at the different mortgage lenders, you should see what terms they are offering you. Some lenders offer shorter terms, but you have to consider if this is better because you may have higher monthly repayments. You should also find out if there are any help-to-buy schemes for first-time buyers that could make your mortgage easier to handle.
Make A List Of What You Want
Once you have your mortgage sorted out you need to start looking at houses. Before you head to the estate agent, you need to create a list of everything that you want your home to have. This should include the number of bedrooms and ideal locations. Of course, you need to be realistic with this and have a list of points that you are willing to compromise on.
Find An Agent
When you buy a home for the first time, you should hire an agent. They will be able to look at the properties on the market for one that meets your criteria, and they can arrange a viewing. The agent you choose should be a full-time agent who is licensed and has experience in your area. The agent will also be able to handle the negotiations when you make an offer on a property. It is important that you are comfortable with the agent you choose because they are your middle man.