Buying your first home is a big step and one you’ve probably been considering for some time. The process can seem overwhelming though, so how to know where to begin?
First things first…Start with talking to lenders. They will pull your credit scores and look at your income, so be prepared to have your income information from the last 2 years ready to share with them. From there, they will let you know what sort of loans you qualify for and what your budget should be. They’ll also let you know how much cash you should have available for a down payment as well as closing costs. You’ll need anywhere from 0-20% of the purchase price to put down towards the purchase, as well as another 2-5% of that price to cover your closing costs. It is worth noting that VHDA and Piedmont Housing Alliance offer assistance via grants and other programs as well as classes for first time homebuyers to guide them through the process. For more information, check out their websites.
After you have been pre-approved, A lender will provide you with what is known as a pre-qualification letter that will state the terms of your loan for you to take to a Realtor.
It is important here to note to talk to several lenders, to find one that is the best fit for you and your needs. You’ll want to work with someone you feel comfortable with. The same goes for the next step in your search – finding a Realtor. You’ll be spending a lot of time with this person (or team), so you’ll want someone you trust, who you feel gets what you are looking for. Ask friends for recommendations and then chat with a few to ensure you are making the best choice. After all, purchasing a home is one of the biggest decisions of your life – you’ll want to be comfortable and know you’re in good hands throughout every step of the process.
Before you talk to a Realtor though, it’s a good idea to have a list of the features you are looking for in your new home. Are you up for some renovations, which could get your more house for your money or do you want something move in ready? New construction vs old? Do you want a large yard or something smaller? A garage? One level living? Carpet vs hardwoods? How many bedrooms and bathrooms? Detached or an attached home? Do you want a home for your family to grow into or will this be a ‘starter home’ that you only plan on being in for a few years? Is there a certain location or section of town you’d prefer to live in or are you more open to other parts of our area? Do you want an HOA or would you rather avoid them? You don’t need to have answers to all these questions, but it’s helpful to have at least a few ideas of what you know you don’t want when beginning your home search.
The next step is sitting down with a Realtor who will begin to send you listings in your price range for you to browse through before setting out to start viewing them in person. You will want to be sure that your Realtor is in contact with your lender, so that when the time comes to make an offer on the property you deem to be THE ONE, the process goes as smoothly as possible. Oftentimes, a lender will customize a letter to go with an offer on a specific property to help boost your offer, which can be helpful in particular markets.
Once you have an accepted offer and a pending contract, you’ll need to give your designated escrow agent (your realtor or closing attorney) a check known as the Earnest Money Deposit. Depending on the price of the home, this amount could be anywhere from $1000 and up. You’ll schedule a home inspection with a licensed home inspector. The purpose of the home inspection is to ensure the systems of the home – the roof, electrical, plumbing, heating and cooling – are in good working order and the structure is sound. Your Realtor will be there with you, guiding you through the process. Your inspector will create a report of their findings for you to use in negotiating which items you’d like to have repaired by the sellers before finalizing the purchase. If you haven’t already done so, you’ll need to determine a closing agent who will help you coordinate the closing on your property. Whether you go with a closing company or a Real Estate Attorney, they’ll work with your Realtor and lender to help ensure the purchase of your home goes as smoothly as possible.