A Checklist for First-Time Homebuyers
Are you tired of reading articles describing how to buy a home, yet after each one you’re still not sure what to do?
You’re left with questions. What if… scenarios. How about this… conversations. Finding a home sounds simple, but when you realize the financial commitment involved, it becomes a whole different adventure. You want to cross every T and dot every I.
Buying your first house is an investment into your future. Yes, it may be scary. You’re devoting a large sum of your life savings to it, after all. But I’ve got the right checklist to help put you at ease.
1. Talk to a Mortgage Lender (or your bank)
Whether you’re 12 months out or 4 weeks from buying a home, there’s one question you need to address before starting: How much can you afford? As you start to window-shop, you’ll want to get a sense of what properties you should actually look at.
There are a lot of mortgage calculators you can use, but the easiest method is talking to a mortgage lender. They can address any questions or concerns you might have.
Carefully note that I’m not saying “choose a lender.” Keep it casual. Contact a mortgage lender and let them know you’re thinking about buying a house this year. Tell them you want a ballpark figure for what you can afford. The only information they should need is your income, debt level, and current savings.
2. Gather Financial Documents
Here’s a short list of documents you’ll need to get a mortgage loan. By gathering these, you’ll learn what things you need to get in order before nearing the finish line.
- Tax Returns (dating back at least 2 years)
- Pay Stubs (usually for the last 3 months)
- Other proof of income (i.e. stocks, bank interests, child support, etc)
- Letters of Financial Gifts (if a family member gifts you money for the down payment, the lender will want to see a letter of proof from that person)
- Bank Statements (i.e. information on your checking and savings accounts; last 2-3 months)
- I.D.s (a driver’s license will usually suffice)
3. Choose a Real Estate Agent & Mortgage Lender
As you narrow down your home search, it becomes time to choose a real estate agent and mortgage lender. That way, when you see a home you really like, you’ll be able to make an offer and close the deal faster (which home sellers like).
People often choose an agent first, and then the agent can refer some mortgage lenders to consider. But always do your own research. Talk to your bank and see what they offer. Compare just like you would buying a new computer or car.
If you’re not sure if the real estate agent you’ve found is good, ask them how many transactions (i.e. deals) they’ve done recently. Ask them about the neighborhood or market you want to buy in. An active agent -- an expert agent -- will be able to answer you right away.
4. Make a Shopping List & Start Searching
This is the hard part to choosing your first house -- What do you need versus what do you want? It’s easy to watch HGTV and say, “Yeah, I really like those decorations. I want the same for my house.” In reality, you’ll need to compromise with yourself more often than you think. Make a list of needs versus wants.
Secondly, think about the future. In 5 years, will this house still be a good fit for me? In most cases, the benefits to buying a house start to outweigh renting only after 5 years.
Enjoy the house hunt!