Becoming a homeowner is well worth pursuing for its financial benefits. If you know that you are going to stay local, it makes sense to save money by paying an affordable mortgage instead of renting a home for a higher monthly payment. In addition, each time you pay toward your mortgage, you are one step closer to owning the property in full. Appreciation is your friend! Meaning you are investing in something that will grow in its worth and contribute to your wealth. Homeowners also benefit during tax time by being able to deduct the interest they pay in their mortgage, resulting in owing less money to the government and even getting a refund.
WHAT DOES IT TAKE TO BECOME A HOMEOWNER?
Though the prospect of owning a home is exciting, you probably have a lot of questions and concerns. It’s natural to be nervous as a first-time home buyer. You may be wondering how you get started and how you can be sure that you are getting the best deal.
So let’s get down to it!
QUESTION #1: “WHERE DO I START?”
First and foremost, you need to make sure you qualify financially. After all, without money, you can’t buy a house. There are plenty of lenders out there to choose from that range from independent companies to your bank or credit union. Go with the lender that offers the best customer service and most competitive interest rates.
One of the first things you will need to check is if you are pre-qualified for a loan, so you should have this step covered before seeing houses. When your lender examines your credit score and financial situation, he will decide if you qualify for a loan. If you receive a lender’s pre-qualification letter, you are then ready to move on to the next step, which is finding an agent. Hey… we might know a few! And if you need a lender, we know the best of the best in Rochester.
QUESTION #2: “WHO'S THE BEST AGENT FOR ME?”
At Team Hilbert, it’s easy to find your match made in real estate heaven. Check out the ‘About Us Page’ and pick an agent who is knowledgeable about the area you want to live in and who you get along with. We can set up an initial consultation with your agent where so you can discuss what you want in a home. Your agent will then align what you want with the price you are qualified for and populate a list of homes that fit the bill.
Let us be your advocate during the buying process, as a first-time home buyer, you’re going to need one!
QUESTION #3: “WHAT SHOULD I LOOK FOR IN A HOME?”
The answer depends entirely on what you want—with some basic guidelines. A starter home isn’t likely to be your final home, as your needs can change over the years. Therefore, buy with the aim to sell in the future. It is common for young professionals to move out of their home after a few years to pursue a lucrative career states away. Or, a new baby can make it necessary to seek a larger home in a kid-friendly neighborhood.
Your agent will be able to point you in the right direction if you explain you are buying with the aim to sell within 5-10 years. This may result in you seeing homes only in neighborhoods that have had proven increases in home value over the years.
Certain styles of homes may be more popular than others in your area, so your agent will advise you toward types of homes that are timeless and appealing to many home buyers. Agents are keen on what kinds of houses fly off the market in days and which ones take aggressive marketing to sell. Ask your agent what’s the best course of action—you will be glad you did when it’s time to relocate.
QUESTION #4: “HOW MUCH MONEY SHOULD I SAVE BEFORE BUYING A HOME?”
The general rule is that the higher your home’s price is, the more you are likely to pay. Down payments range from 5-20% of the sales price. Closing costs are on average 2-7% of the contracted home price. Therefore, unless you are using a VA or USDA Rural Development loan that doesn’t require down payments, you will need to have some substantial money in the bank.
Buyers are typically held responsible for the costs of the home inspection, down payment, document fees, and closing costs. There are ways to save money by rolling the closing costs into your loan or have the sellers pay them, so ask your agent to find any way to keep things affordable for you. Motivated sellers are often keen to make concessions in order to not lose a qualified buyer, so it never hurts to ask for a bit of assistance.
YOUR JOURNEY STARTS HERE.
We hope that this guide has given you a picture of what the home buying process is like. If you feel you are ready to find out more about home ownership or how else you can be prepared for it, contact us anytime! TEAMHILBERT