First Time Home Buyers Checklist
We've been in this process since last november 2014 of buying a home as first time home buyers and after a friend who also wanted to buy a home started asking me where to start I decided to compile a resource checklist for everyone or anyone who might want to know how to buy a house. I am not an expert just sharing a few things that I know personally this list isn't exhausted by any means but it just might help you in the process a little bit.
Before buying a home Dave Ramsey recommends paying off your debt first and having a healthy emergency funds savings. We are debating if we are going to do that or not my husband just bought the financial peace university and is going to study the steps involved. We've been renting for 5 years and just want to buy a house but it might be worth it in the long run to save more and get our debt payed off first and have that extra money freed up to buy a home that we can really enjoy for a very long time.
Save Your Money- know how much money you will need in advance and make sure you are in the right financial bracket when looking at homes that you can comfortably make payments on each month recommendations are that your monthly payment shouldn't be more than 25% of your take home income, that you have 3 months of income saved in an emergency fund, and pay off your debt prior to considering buying a home and that you have atleast a 10% downpayment to offer plus your closing costs which are: realtor fee: 3% of sales price, lender fee: $1500 (that's ours), appraiser fee: $450, inspection fee: $400- $500, title policy: $800, Down payment: 5% for Conventional, 3.5% for FHA loans minimal.
Get Pre-Approved by a Lender this lets everyone involved know that you are credit worthy. You might need to work on your credit before preceeding. But, don't think that just because you're preapproved for a max amount that you should get the max approved for. You can use a mortgage calculator to determine all the calculations involved. I use these calculators: http://www.aaron.loans/Calculators/Payment.aspx this one tells you your principal and interest which is really nice to know and http://www.aaron.loans/Calculators/PrePay.aspx prepayment savings I love this one if you just payed an extra $4500 annually (which is our income tax return) on a $60K loan that's 5% interest for 30 years we would pay it off in: 8 years 7 months and save: $42k on interest!! that excites me how about you?? never just pay minimal that's what the lender wants because they will make the most money experts say get a 15 year loan instead. For us we plan on getting a 30 year loan and paying it off using our annual income tax refund as shown in the above example that would make our monthly payments $320 principal + interest. Principal is: $72 interest is $250, this changes annually as you pay extra n make regular payments. Plus your other fees: insurance and property taxes adds $300 - $400 per month for a total payment of $620 - $720 dependent upon specific homes insurance and property taxes. This would be ideal for being in our price range of 25% of take home income. This calculator tells you how much you need to make for a specific home loan: https://www.churchillmortgage.com/calculators the link was really long you can find it here.
- Find a Realtor someone referred to you buy a friend or relative sign up with several online realtor sites to do your home searches heres a few unique ones i frequent in addition to the normal ones: eppraisal.com, realtor.com these are unique that they offer additional free information the other sites do not offer see for yourself. I go to my realtors page of course which is keller williams and i also go to zillow.com or i might just type in a home i past by for sale to do research on it from the sites that pop up. i've learned to scope out houses that look nice -online pictures can fool you trust me i've been shatttered many times by the pics and seeing the houses for myself makes a big difference. take your own pics before deciding if you want to call your realtor and schedule a walk through of the inside. Alot of the times we've decided no before seeing the inside just going there and looking at the house from the outside, the neighborhood, the area it's in. If you still want to see it, find out the property taxes and see if it would work in your financial plan first if it's way too expensive than cross it off your list.
- Make a List of must haves, needs and wants your realtor might give you a print out of this and other helpful need to know info on buying a home.
- Know the Cost get a good faith itemized estimate from lender or several lenders
- to include their cost, insurance cost, property taxes, loan amount, monthly payment
- Look at houses in your price range and stick with your plan dont be house poor
- Make an offer wait if ur offer isn't accepted keep looking if it is...
- Compare several lenders before choosing one
- Get an inspection and decide to move forward or stop and keep looking (this is where were at)
- follow the steps your realtor and lender will walk you through
- if you qualify for down payment assistance that's 4% off sales price deducted at closing