how to purchase a home

How to Purchase a Home: A Guide for First-Time Buyers

VWB Blog 2 years ago 13

Only 33% of house buyers are first-time buyers.

And there are lots of reasons why fewer people are joining the property ladder every year. The skyrocketing real estate market and the desire for young people to spend their money elsewhere are some of the factors.

But many who do want to become homeowners find the process of how to purchase a home too confusing and stressful. They don’t realize that with forward planning and research they can make all their real estate dreams come true.

Do you want to know how to buy a house so you can do it yourself someday? This simple step-by-step guide explains exactly how to buy a home in simple, easy-to-understand terms.

Prepare to Be a Homeowner

Don’t skip over this step of how to purchase a home because it’s the most important. Owning a home could be one of the best things you ever did, but it’s important to be aware of the realities.

Pay off your other debts before taking on a mortgage as the repayments might become overwhelming. You will often need to provide income history from the last two years, so make sure you have steady employment before buying a house.

And though it’s difficult to answer the question of how long does it take to buy a home, it can sometimes take years. Make sure you’re in it for the long haul.

Decide on Your Budget

Since you are a first-time buyer, you can skip the “selling your home” step of buying a new home. This can be one of the biggest stresses of buying a home, so that’s a plus! But the second biggest stress is having the money to pay for everything.

Here are some of the main expenses you should budget for when buying real estate:

  • Down payment (5% – 20% of the entire house cost)
  • Valuation/appraisal fee
  • Inspection fee
  • Legal fees
  • Closing costs
  • Moving costs

These are all the upfront costs. But, you should also budget monthly mortgage payments, renovation costs, and maintenance costs.

Realtor fees are often paid for by the seller and not the buyer. So, you can avoid these costs altogether since you’re a first-time buyer.

Organize Your Finances

Steps two and three go hand in hand. You likely can’t come up with a concrete budget without knowing where you will get the money from or how much you need!

52% of first-time buyers in the US receive help from loved ones for their down payment. So, if saving for a 20% downpayment seems difficult without outside help, that’s because it is. Most first-timers put down 5% or 10% instead.

Contact a mortgage broker to help you check your credit score. They will also be able to tell you the length of the mortgage you can get as well as predict the monthly amount.

Mortgage brokers will help you find the best mortgages for you. Contact a few banks and get pre-approved before you start looking. There might be loans (FHA loans, VA loans, or USDA loans) that you might qualify for, too.

Create a Real Estate Wishlist

Now you have a better idea of what you can afford, make a list of qualities you need in your ideal home. There are only so many hours in a day and you cannot spend them viewing every house on the market, so narrow down your search.

Decide your ideal neighborhoods and locations. Create a list of “must-haves” and a list of “nice-to-haves” in your new home. This will help you realize what is essential and what isn’t.

For example, off-street parking might be a “must-have” because a house either has it or it doesn’t. But underfloor heating in the bathroom is a “nice-to-have” because you can add that yourself later.

Find a Real Estate Agent

Next, find a good real estate agent that will work hard to find your dream home. Ask your friends for recommendations and don’t be afraid to go with someone else if the first one doesn’t deliver the goods.

View Houses and Make an Offer

This step might look easy but it has the potential to be the most time-consuming step when buying a home! Search through real estate websites and view any property you like.

And if you like the property a lot and it’s within your budget, make them an offer. You might have to make many offers to many different properties (not at once!) before one accepts it, so try not to get your hopes up.

Organize a House Inspection

Your mortgage broker can help you organize a house inspection. Home inspectors look for any underlying problems in the home (mold, electrical hazards, etc.) that you might miss.

Organize a Home Appraisal

If you are buying a home with a mortgage, you need to get a home appraisal. Banks will not give you a loan for a $500,000 house if it turns out the home value is only $250,000.

Your mortgage broker can help you organize this, too.

Do a Final Walkthrough and Close

If you are happy with the appraisal and inspection and you still want the house, the last thing to do is a final walkthrough.

This is where you can check that the current owners fixed any problems that came up in the inspection and make sure you are 100% happy with the property.

Then, you can close the deal by making all the necessary payments and signing your mortgage or deed. Once the closing is complete, you will be a homeowner!

How to Purchase a Home in a Few Simple Steps

Figuring out how to purchase a home might seem simple now you know exactly what’s involved, but it isn’t easy. Even if you have your finances in order, there is still a lot that could go wrong along the way.

But if you stick with the process and keep an open mind, then you will get the keys to your first home, and all the stress will have been worth it.

Buying a home is only the beginning of your adventures in real estate. You’ll need to renovate and redecorate your new place, too! Browse our website for all the remodeling, DIY, and home decor tips you will ever need.

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