For many people, buying a home is the biggest and most important investment of their lives. It requires you to take a realistic look at your finances and make a lot of decisions. Where do you want to live? Do you want a ranch or a two-story home? Would you like a garage, basement or a big yard? But finding the perfect place is just one step on the path to homeownership. When you’re ready to buy your first home, consider these eight helpful tips.
- Examine your financial situation
Have you had a regularly paying job for 2-3 years? How much money would you save if your rent payment went to pay a mortgage instead? Do you have savings or other assets that you could use as a down payment? Does being a home owner suit your lifestyle? How financially secure are you? Are you prepared to take on a significant long-term financial commitment
- Understand what you can afford
Understand how much house you can afford — today and a few years down the road. Request and review your credit report for errors or inaccuracies. If necessary, take steps to correct inaccuracies or to otherwise improve your scores. Learn about the different kinds of mortgage loans available and which might work best for you. [You’re in luck! First Internet Bank Loan Officers are happy to discuss your options and help you calculate how much you can afford to borrow.]
- Get pre-approved
Increase your odds of a successful home search by getting pre-approved so you can demonstrate to realtors and sellers alike that you’re a qualified, serious borrower. A pre-approval letter provides confidence to your Realtor and seller, and sets you up well for negotiations. [Nudge nudge: First Internet Bank offers pre-approvals at no cost.]
- Work with a realtor
It usually pays off to work with an accredited Realtor (buyer’s agent) who will represent your best interest as a buyer. Choose one who is responsive to you and provides guidance whenever you need it. Ask for a signed agreement that has a time limitation (usually 3-4 months) and a provision that states that the agent is working directly and exclusively for you. The Realtor gets paid when you buy a home, so you should not pay any fees upfront.
- Choose your home
There are many factors to consider. Build or buy? What style? Where? You might also consider neighborhood covenants and amenities as well as schools and shopping the area. Your Realtor is an expert in your local market and in helping people like you find the right home. Open communication with your Realtor will help you find the right home for the right price.
- Make an offer
Your loan officer can lock in your rate after you have an accepted offer. You’ll be asked to supply documentation, and the information you provide will be validated. Early in the process, an appraisal of the home you intend to buy will be scheduled (you’ll receive a copy of the report). Your lender will obtain and examine a title report to confirm the seller has free and clear ownership of the home and can rightfully transfer ownership to you.
- Order an inspection
It’s a very good idea to order an inspection by a professional home inspector and have the seller make any needed repairs or updates. (An inspector and an appraiser have two different goals: An appraiser gathers information to support an accurate estimate of the value of your home, while an inspector is more interested in the condition of your home.) The inspector will examine and test everything in the home to identify potential problems. Your Realtor may have a recommendation for an inspector.
- Make it official!
Once all the information is gathered, verifications are complete and you’re approved for funding, it’s time to close on your loan! Your loan officer will be in touch with you to arrange your closing at a time and place that works well for you. To prepare for the closing, review your documents to ensure everything is accurate. If you need to bring money with you to closing, plan to bring a cashier’s check or make plans for a wire transfer of funds. After the closing comes to best part: It’s time to celebrate! (And start packing to move into your new home!)
As always, First Internet Bank is here to help you. Contact us today at 1-866-742-5158 with any questions or to take the first step toward owning your first home.