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First Time Home Buyer Checklist

First Time Home Buyer Checklist

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So you’re ready to begin buying your first home! It’s an exciting time. To make sure the process goes as smoothly as possible, it helps to refer to a first time home buyer checklist. This way, you know exactly what you need to be doing at each step.

We’ve prepared a list of considerations so that you can be confident as you begin your journey as a first-time home buyer.

1. Know your numbers

The first step is buying your first home is knowing your numbers. These include:

  • Your income
  • Your housing budget
  • Your credit score
  • Your savings.

These numbers will all affect how much home you can afford.

Your income will dictate how much money you can afford to set aside each month for your housing payment -- experts recommend no more than 25-40% of your income goes to housing. For someone who earns $5,000 per month, for example, $1,250 to $1,750 would be a starting point for your housing budget. Use our mortgage calculator to help estimate your payments.

Your housing budget should take into account your potential mortgage payment each month, but also insurance, taxes, and home maintenance costs.

Your credit score will affect the interest rates you will be able to secure, so you should know what your credit score is. The higher your score, the better the rates -- lenders will see you as an attractive loan customer.

Finally, your savings. How much do you have saved so far? What you are able to put down for a down payment will affect how much you need to borrow (and eventually pay interest on), so it helps to know how much you can afford to put down.

2. Pre-qualify for your mortgage

To speed up the process, it helps to pre-qualify for your mortgage. Your bank can help with this.

Pre-qualifying means you have the basic requirements necessary to get a loan -- it doesn’t mean you WILL get the loan. When you prequalify, a lender is taking the first steps toward verifying that you are a worthy borrower for a home loan.

There is also mortgage pre-approval, which is a similar concept taken one step further. In a pre-approval, the bank runs your credit report to get a better idea of how much you can afford to borrow.

Getting this information from your lender ahead of time helps you narrow down your price range as well as get a head start on the loan process. Plus, it shows both the bank and the home seller that you are serious about buying a home.

3. Check out the available loan programs

So many first-time home buyers leave a lot of money on the table because they don’t consider the available loan programs. These programs are designed to help people buying a home for the first time, and there are many different options available, including several government programs.

Some federal loan program include:

  • FHA (Federal Housing Administration) Loans
  • VA (Veterans Affairs) Loans
  • USDA (U.S. Department of Agriculture) Loans.

These loans have very low down payment requirements and great interest rates. Plus, you don’t have to be low-income, or a veteran, or a farmer to take advantage of them -- the United States wants to get people into their own homes! So be sure to ask your bank whether you qualify for these loans.

There are also many different types of down payment assistance programs that can help you in your home purchase. These programs are available at the state and local level, and they are intended to help you afford your home purchase.

There are also programs aimed at people with certain types of jobs, such as teachers and police officers, so be sure to explore all the avenues available to you based on your situation.

Contact your bank for help learning about all the available options.

4. Hire a professional real estate agent

With your target price range in mind, it’s time to hire a real estate professional who can help you find the right home. These experts know the market inside and out and have access to insider information about new homes for sale - more than what an average person can find on the internet. A good real estate agent is your secret weapon when it comes to finding quality homes, knowing the local market pricing, and navigating the home buying process.

Not all agents are created equal. Get referrals from friends and family for the agents they know and trust. Also consider searching out an agent who specializes in your particular area, home preference, or price range.

5. Make the offer!

This is the part where your heart will pound. Once you have found a home that ticks all of your boxes, it’s time to make the offer. Your agent will help you draft a purchase offer that spells out your offer price as well as any other considerations, such as contingencies.

In a hot seller’s market, you may have to offer more than the asking price. In cooler markets, offer what you think is fair, keeping in mind that a price too low will offend the seller and sweep your offer right off the table.

Waiting to hear if your offer is accepted -- or is countered by a new offer -- can be nerve-wracking, but it’s all part of the process to get you closer to your new home.

6. Prepare for closing

When you have an offer accepted, a new range of tasks need to be completed:

  • Complete inspection
  • Complete formal loan paperwork
  • Secure homeowner’s insurance
  • Run title search
  • Take final walkthrough
  • Pay down payment
  • Pay closing costs and fees
  • Sign closing documents

You will likely need to have the home inspected and appraised in order to get a loan for the purchase price, plus make sure any other reports are completed, such as pest inspections. You will complete the final, formal loan paperwork, make sure the property has a clean title, and secure homeowner’s insurance for your new place.

The day before closing, you’ll do a final walkthrough of the property to make sure everything is as it should be. Then, about 30-45 days after your offer was accepted, it’s time for closing. This is the day where you finalize all paperwork, making sure all the i’s are dotted and t’s are crossed. You’ll sign a whole stack of documents, pay your closing costs and fees, and finally receive the keys to your new home.

Count on Consumers

Buying a home for the first time can feel overwhelming. But you don’t have to go it alone. Get in touch with our mortgage loan department at Consumers National Bank, and we’ll walk you through the whole process. Our mortgage lending department are experts at the home buying process, and we’re happy to help you on your journey. Contact us today.

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