As a first-time homebuyer, you may not know what to expect during the buying process. Finding a real estate agent to work with, getting pre-qualified for your first mortgage, what to do and what not to do after getting approved for your mortgage. And then on to finding the perfect home, and learning how an inspection works.
If you’re preparing to buy your first home, here are several tips that will help you move through the process more quickly and avoid unexpected issues.
First – Finding the Right Real Estate Agent
The first step in any new venture is to arm yourself with a list of questions, and have a conversation with a professional – when it comes to buying a home, that’s a real estate agent.
For those who are a part of the LGBTQ community, this may mean finding a gay or lesbian real estate agent in your area. You can do this by visiting GayRealEstate.com, a website dedicated to connecting LGBTQ buyers and sellers with experienced real estate agents.
Second – Get Preapproved
Before you step into a home, you’ll visit a lender to get pre-approved… you need to know how much you can afford, and what amount of cash you’ll need for the down payment and closing costs! Being pre-approved means a lender has run your credit history, considered your income, and has determined that you qualify for a loan of a maximum amount. Being preapproved ensures you’ll not spend time looking at homes you can’t afford. When it comes time to write an offer, your pre-approval letter will show sellers that you are committed and are ready to finalize your financing to buy a house.
As a side note – any lender you approach for a mortgage will run your credit history. They will be able to see your missed or late payments, any loans you have defaulted on, and your total debt. Before you apply for a mortgage, pull your credit history using one of the free services. If you see anything on the report that you know is not your debt, report it. Dispute missed or late payments you know you made on time. You can also note any negative information that is accurate so you will be ready when your lender asks you about those items.
Understand the Expenses You’re Taking on
When you look at your budget to determine how much you can afford to spend on a mortgage, make certain you list all of the monthly expenses you’ll be taking on. Those who have been living in an apartment or renting may have some or even all of their utilities rolled into the rent.
When you buy a home, you will have to cover all of these utilities yourself. This includes water, garbage, electric, gas, phone, and internet services. You may also be required to pay a homeowner’s association fee. Property taxes and insurance are two more costs to add to your list, although they may be included in your mortgage payment.
In addition to these monthly costs, you will also have a number of one-time deposits to make the utility companies. Additionally, you may need to purchase yard care equipment or pay for a yard service, buy furniture, and purchase paint and other household items. You also cannot forget to budget for closing costs unless the contract specifies that the seller will cover this expense. Purchasing a home is much more than simply making a down payment and paying a mortgage.
Add to Your Savings
Many buyers work to improve their savings before buying a house so they have the finances needed to make a down payment, pay closing costs, and purchase items for their home.
Keep in mind if you have retirement savings you may be able to tap into that for your down payment – it may be worth it while interest rates are low. Also, family members can often “gift” you your down payment!
Jeff Hammerberg is the Founding CEO of GayRealEstate.com – A free nationwide database of gay, lesbian and gay friendly