Buying a home for the first time is exciting—you’ll finally have a place to call your very own, and odds are, you’re making your first truly significant investment. However, there is a great deal of complexity involved in real estate transactions, and you want to make sure you avoid the pitfalls that people often fall into when buying a home for the first time.
There are a few precautions you can take to get started with the home buying process.
Assess Your Finances
Before anything else, you need to analyze your finances and determine just how much house you can afford. Typically, you don’t want to spend more than 30% of your monthly earnings on housing—otherwise, you’ll find it very difficult to get approved for a mortgage, and even if you do get one, making payments each month will be challenging at best.
When determining your finances, you want to take into account all income and all your current expenses. Figure out how much you pay each month on utilities, food, car payments, vehicle maintenance, entertainment, clothing, savings, and so forth, and determine how house payments will factor in.
Find a Lender
Once you have an idea of how much your budget will be, you’ll want to get preapproved for a loan. Get your financial information together, including monthly income, credit score, and current debt information (such as car loans), and shop around for the best rates.
You will also want to factor in the cost of mortgage insurance, which lenders will often require on most loans. Finally, it’s best to get preapproved for a few different loans so that if one falls through, you’ll have other options.
Choose a Realtor
As early in the process as possible, choose a real estate agent. They will help you through the entire process and act as an intermediary between you and sellers. Realtors also have an in-depth knowledge of the housing market and will be able to help you find the home that best fits your desires and budget. When it comes time to purchase a home, they’ll be able to negotiate fair terms for the transaction.
Get a Real Estate Lawyer
In addition to an agent, you will want a real estate lawyer. Real estate transactions involve numerous forms and contracts, and you’ll want to be represented by a skilled attorney—especially since sellers will usually employ their own lawyers.
When negotiating contracts, reviewing titles and deeds, and surveying the property, you will need someone who can provide legal advice and make sure the paperwork doesn’t favor the seller unfairly. They will look out for your best interests in terms of the agreements you sign and help you through escrow.
Choose a Place
With the guidance of your realtor and real estate attorney, you’ll be able to choose a place that satisfies your needs, negotiate a fair price, and sign the necessary agreements with full assurance that you’ll be standing on solid financial and legal ground. If this is your first time buying a home, Hart David Carson, LLP, can help you through the legal aspects of the process.