Home Buyer Checklist
Buying your first home is an exciting step to take and one of the more important decisions you’ll make in your life. Your first home will affect numerous aspects of your life including your commute to work, the community you’ll be living in, the school district for your kids, and so much more. Suffice it to say, purchasing your first home should not be taken lightly. However, many people get overwhelmed the first time they go through the homebuying process, which can make getting started a little daunting.
That’s why we’ve created these tips specifically for first-time home buyers. It’s the perfect comprehensive checklist of all the things you’ll need to do before closing on your first home.
Make a List, Check It Twice
When it comes to purchasing a home, there are seemingly endless options for you to choose from. That’s why narrowing down your wants and needs for a new home can help keep things organized.
Create a list of needs, which includes things that aren’t as flexible for you. For example, maybe you really want a backyard, a good school district, and a great community. These are the things that are important to you that can be considered “must haves” for your new home.
Next, create a list of wants that includes things that aren’t necessary in order for you to be satisfied with your home but can definitely add to the experience. For wants, you could list things like a fireplace, finished basement, and an island in the kitchen.
Once you’ve narrowed down your needs and wants, it’s time to create a budget.
Know What You Can Afford
This step is key to finding your first home. It can be really disheartening to find that perfect home only to realize it’s way out of your price range. Setting a budget of what you can afford will help keep the house search realistic and help narrow down your options.
Take a look at your finances, and determine how much you make each year. While you may get bonuses or raises throughout the year, don’t budget for those quite yet. Because those events are more conditional and could change throughout the year, leaving them out can help you come to a more solid number for what you can spend on a home. And, if you happen to get a raise or bonus before you purchase a home, you’ll have more wiggle room than you initially intended, which can be used for upgrades if you wish.
Other important things to consider when looking into your budget include:
- Debt (student loans, car payments, credit cards, etc)
- Monthly bills
- The market value for homes
- Estimated monthly mortgage payments
- Homeowners insurance payments
- Closing costs
Knowing your annual income will be important when applying for a loan to buy your first home, which we will talk about next.
Gather Information to Get Pre-Qualified
When purchasing a home, you’ll need several documents showing proof of credit scores, income, financial history and obligations, and so on. It may take some time to gather everything, but you’ll be grateful you took the time to do so. It will make the entire home buying process so much easier.
Getting pre-qualified for a loan will allow you to get the money you need to purchase your first home. Pre-qualification can also help narrow your search once you know how much lenders are willing to give you for your home. (Don’t give into temptation when you see how much you qualify for. That number is often a little more than you may comfortably afford.
In order to get pre-qualified, you’ll need these documents:
- W-2 forms from the past 2 years
- Pay stubs from the last 30 days
- Proof of your income sources
- Tax returns from the past 2 years
- Recent bank statements
- Long-term debt information (such as student loans)
- Government issued ID
A strong credit score, low-to-manageable debt, and steady income will all benefit you when getting pre-qualified for a home loan. If your credit score isn’t quite where you’d like it to be in order to qualify for the home you want, you have a few options to increase your credit score:
- Always make payments on time
- When possible, make more than the minimum monthly payment
- Apply for new credit only when needed
- Pay down outstanding debt
- Keep your credit balances below 30 percent
- Increase credit card limits on accounts you already have once outstanding balances are low
Be sure to be thorough when getting pre-qualified to ensure you’re getting all of the options available to you. Once you get pre-qualified for a loan, it’s time to decide which loan you want to apply for.
Getting a Loan
Everyone is in a different situation financially, which is why there are a number of different loans you can choose from. Depending on your credit score and income, you can qualify for a number of loans to help finance your home. A few of them include:
- Conventional loans
- Utah Housing Authority loans
- Federal Housing Administration (FHA) loans
- VA and Rural housing loans
Once you’ve chosen a loan, there will be a number of decisions you’ll need to make, such as how long you want to pay off the loan (typically it’s 15 or 30 years), if you want a fixed or adjustable mortgage, and how much in interest you are willing to pay. In fact, you can use a mortgage calculator to estimate what your monthly payments would be for different homes.
The next step is the one you’ve been waiting for: looking for homes to move into!
This is definitely the fun part of purchasing a home! Now that you have an idea of what kind of house you’d like, your budget, and your pre-approved loan, you can begin to look for houses on the market that fit your criteria. This is where an EDGEhome agent can help match you to your perfect home. They have a better idea of what’s available and how to meet your wants and needs. A real estate agent also knows all the ins and outs of buying a home, so if at any point you have questions, you can go straight to them and they can give you expert advice on how to move forward with purchasing a home.
Stay organized and keep a spreadsheet or document of some of your favorite houses you find. Don’t forget to include notes of things you may want to ask your realtor. It’s also wise to keep track of contact information for each house you choose for quick and easy access when you’re ready to reach out to sellers or their agents.
Once you’ve found that perfect home, it’s time to make an offer. If accepted, you’ll begin the contract and closing process
Closing on a Home
The time has come; you’ve found the perfect place to call home and you’re ready to commit. Once you’ve accomplished this, it’s time to draft up a purchase agreement. This agreement includes a number of different things, such as the price agreed to pay for the home and conditions that must be met before a move-in date.
Submitting a purchase agreement is something that needs to be done quickly. There will be other buyers interested in the same house as you and if they get their offer in before yours, you could lose the house.
You’re a Homeowner!
Once you close on a home, it’s yours to move into! All of your hard work has paid off and you can start settling into your new home.
Let’s recap the checklist of the steps you need to take to become a homeowner:
Make a list of wants and needs for your future home
Solidify your budget
Gather information to get prequalified
Choose the type of loan you’d like to apply for
Start searching for homes with a real estate agent
Submit an offer and purchase agreement
Close on the home
Celebrate and move in!
Buying a home for the first time is one of the most important financial decisions you will make in your life, so don’t do it alone. Let EDGEhomes help you find the right home for you and your family.
Need help getting ideas for what you want? Browse through our home galleries for some new home inspiration. And if you’re ready for a quick move-in, EDGEhomes has some beautiful homes ready for you to close on! Contact us today and we’ll get you started on this exciting new journey.