Your Keys to a Good Move: A Guide to First-Time Home Buying
Buying your first home is a big step. And unless you’re a real estate enthusiast, you might not know where to begin. To get your search started off on the right foot, we’ve broken down your first-time buying guide into 6 simple steps. Happy hunting!
1. Determine a budget (without breaking the bank!)
That involves a whole lot more than double checking how much you have in your savings account, though. Decide how much money you’d feel comfortable putting down and how much of a monthly mortgage payment you can swallow. A good rule of thumb is to keep the costs of your mortgage, taxes and insurance between 25 and 30 percent of your annual income.
As you’re crafting your ideal amount, you’ll want to obtain your credit score and complete a mortgage pre-qualification. Consider any upgrades or renovations in the budget, as well; if you don’t have the time, energy, or savings for a total fixer-upper, focus on move-in ready homes. You’ll want to account for taxes and any added utility costs you might incur upon move-in. Last but certainly not least, consider all of the closing costs before you seal the deal—that includes an inspection, radon tests, and termite tests which can cost upwards of $450 each.
2. Find a local lender
Before applying for a mortgage you’ll want the highest credit score possible (740 and above) and a lender can help you determine what’s causing the concern, if for some reason your score is bad. They’ll help you sort through any unknown issues that could be affecting your credit score—like old cable bills, leases, student loans and credit cards that are bogging down collections and can pre-approve you for a mortgage. Even if you’re not ready to buy today, lenders can help you responsibly plan for six months to a year down the line. They’ll ensure you’re pre-approved for a home loan and can even put you in contact with a Realtor in your desired region.
3. Research mortgage options
Your lender will also be your biggest ally in finding a mortgage that works for you. They’ll assess whether you’re eligible for mortgage programs, like USDA loans, VA loans, FHA loans, FHA 203K loans or private mortgage loans and help you decide on your repayment plan. If you want the smallest mortgage payment, you can opt for a 30-year fixed mortgage, but if a 20-year or 15-year fixed loan is affordable, you can secure a lower interest rate. An adjustable-rate mortgage also guarantees a low-interest rate for the first few years of your mortgage. Regardless of the plan you pick, you’ll want that decided before you can seriously consider your new dwellings.
4. Secure a great agent
If your lender or any family, friends or colleagues haven’t recommended a Realtor, you should stick with an accredited real estate company that has quality listings. You’ll want someone with real experience in the areas you find most appealing, who can help you make an informed decision on which neighborhoods would work best for your lifestyle, what’s a good investment, and how much similar homes in the area have sold for.
5. Shop around
Now that you know what type of home is well within your means you can start the fun part—shopping! This is likely the biggest purchase of your life so far, so you’ll want to plan ahead. Don’t just shop around for wow-factor features like granite countertops, hardwood floors, and his-and-her sinks. Consider neighborhoods, school districts, and your commute. Look into how many people already live there, plus find nearby spots to eat, drink, and shop. Think about the kind of surroundings you want to live in. Do you want to be close to restaurants, shopping destinations, and nightlife? Come prepared to ask questions at all open houses and pay attention to details. If you don’t want to be distracted by other potential buyers, schedule something one-on-one with the listing agent.
6. Seal the deal
So, you’ve found your dream home—awesome! But finding the perfect home is only half the hurdle towards becoming a homeowner—closing on your sale is what really counts. The closing process can take anywhere from 30 to 90 days. Once your offer is accepted, you’ll want to schedule an inspection to ensure the home is up to snuff, or if you need to negotiate any renovations with the homeowner before you sign on the dotted line. You’ll have a chance to give the home a final once-over before you fully commit on closing day. On the day of your closing, you’ll meet with you agent and lender to go through your home’s title, sign paperwork upon paperwork, upon paperwork, then at long last be handed the keys to your new digs!
Ready to make the move?
The next step is putting yourself in a stronger home buying position with a pre-qualification from WSFS Mortgage. WSFS Mortgage makes it easy for you to find out how much you can borrow and learn about custom products. With local decision-makers and a streamlined online pre-qualification, WSFS is here to help you find a simpler way home. Get moving today by visiting wsfsmortgage.com.This is a paid partnership between WSFS and Philadelphia Magazine's City/Studio