Buying your first home is exciting, but it can also be overwhelming. Not only is it a big lifestyle change, but it is likely the biggest financial transaction you’ve ever made. It’s important that you rely on the experts to help you navigate the process.

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Get Your Finances in Order

Before you can start shopping for your first home, you need to understand your finances completely. The first step is to determine your budget. There are many online calculators that can help you understand how much you can safely spend on a house. You’ll set your budget based on your income, debt, anticipated down payment, and credit score. In most cases you should plan to spend no more than 25-30% of your monthly take-home income on your housing expenses, which includes your insurance premiums and taxes. Look at your credit report and take care of any potential issues before you begin shopping for a mortgage. During this time you don’t want to incur any new debt. If you don’t have savings to use for your down payment and closing costs, start building that nest egg right away.

Get Pre-Approved for a Mortgage

Once your finances are in order, you can begin to look for a mortgage. The first step is pre-qualification. In most cases, the pre-qualification is based on only a basic understanding of your finances without a credit check. This preliminary step will just give you an idea of what you may be approved for when you apply. The preapproval is a much more comprehensive process. A lender will offer to loan you a certain amount toward a home purchase with specific terms. The lender will pull your credit report and review all your financial documents. This is the time to begin shopping around for the right mortgage for your situation and to see if you qualify for any loan programs. Using a mortgage broker can help you through this process. In a seller’s market, having a pre-approval is crucial. Not only will you know exactly what you can afford, but you will be able to make a much stronger offer because the sellers will know you have your financing locked in.

Make Your Wish List

If you are a first time home buyer, you likely have a wish list of what you want in your home. Sit down and list your needs, your deal breakers, and your “nice-to-haves”. Take everything into consideration both for now and for the future. Create a list of qualities your new home should have and stick to the list. If you have your heart set on a walkable neighborhood, your agent should not waste time showing you homes on a busy street without sidewalks. Consider if you are looking for a starter home or forever home, and take those things into account when you are making your list as well.

Find a Real Estate Agent You Trust

Once your finances are in order and you know what you are looking for in your new home, you can begin to look at homes with a real estate agent. Buying a new home can be an overwhelming process, and your agent will be there to take you through the process. Choose your agent carefully, especially if you are a first-time buyer. Ask for referrals from local friends and family and meet with a few agents before deciding on one you trust to guide you through the home-buying process. You will be spending a lot of time with this person, so you need to make sure you find an agent you can connect with.

Prepare the Right Offer

When you’ve found the right house, let your agent guide you through the offer and negotiation process. The important pieces to remember are to stick to your budget and be careful about waiving the inspection. In a seller’s market, many first time buyers begin to resort to tactics such as waiving all inspections or bidding over their budget, but this is a risky move. You may be stuck with a mortgage you can’t afford or a home with serious problems you won’t know about until you’re living there. Let your real estate agent guide you and help you make the right decisions. They can be a great impartial voice and help you make tough choices without emotions getting in the way.

Your real estate agent is your best resource when you are shopping for a new home. Your agent can guide you through the entire process and help you connect with the other professionals you’ll need for a successful purchase! If you’re ready to look at homes, or you’re wondering if you’re ready to buy, contact Amberwood Real Estate today!