Home Ownership

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Real Estate

The Beginner’s Guide to Becoming a Homeowner

Odds are, you’ve never purchased anything as expensive as a home. And if you’re like a lot of first-time buyers, you’re not quite sure how to go about it. From mortgage rates to closing costs, much of it can seem like a foreign language the first time around. To demystify the process, we’ve put together this guide to buying a home.

Determine how you’ll afford a home
Before worrying about mortgage rates, determine what you can afford to spend on housing. CNBC notes most experts recommend spending no more than 30 percent of your take-home pay on housing. This is to ensure you can enjoy a good quality of life and still make your payments in a timely manner.

Once you have a figure, play with a mortgage calculator to see how far your budget goes. Don’t get discouraged if you don’t have a lot to put down on a home. The general rule is that buyers need to put down at least 20 percent to avoid the long-term costs of mortgage insurance, so if it's within your budget, it’s often recommended that you take this route to ultimately save money. However, you can absolutely buy a property without putting 20 percent down, and there are even programs that allow you to buy with no down payment. Loans through the VA, USDA, and FHA all offer buyers the option of paying as little as 0 percent down, so talk to your mortgage loan officer about the best program for your overall budget.

Get preapproved for a mortgage
Once you understand your mortgage options, it’s time to get preapproved. Mortgage preapproval is a commitment from a lender for the amount stated in the preapproval letter. Since it shows buyers that you’re serious, preapproval can help your offer stand out.

Find the right real estate agent
Once you’re prepared from the financial end, it’s time to talk to a real estate agent. But how do you know which one to hire? You can scour the internet, ask for referrals, and read reviews to get a better idea of who would bring a wealth of knowledge to the table. A good real estate agent like Jeffrey Agans of Tierra Antigua Realty knows the local market inside and out and will work with you to ensure that the process is a smooth experience.

Shop around to see what’s in your budget
Next comes the fun part: looking for homes. Start your search online to get a feel for the inventory in your price range. Take note of the neighborhoods, sizes, and fixtures and finishes in your price range as well as the average home price in your area and whether homes sell close to asking price. For example, homes in Tucson typically sell for around their listing price and go pending after about 43 days. This will give you an idea of what to expect during your own home purchase.

Look for homes
As you and your agent visit homes for sale, don’t be afraid to ask questions about the home’s history, open cabinets and doors, and look for signs of potentially-costly problems. Plan to visit any home you’re interested in several times to assess the house and neighborhood before making an offer.

Make your offer and close on a home
The final steps in the home-buying process are the most nerve-wracking, but with a good agent, you can be confident it will go smoothly. Your real estate agent will help you craft a competitive offer, including contingencies and the amount in escrow, then send it to the seller who can accept, decline, or counter-offer. If the seller declines, it’s back to the house hunt. But if they accept or counter-offer, you’re ready to make a deal.

The offer, or purchase agreement, also sets a closing date for your home sale. Closing is when your sale is finalized by signing documents, paying the down payment and closing costs, and receiving the keys to your new home. Closing usually happens four to six weeks after an offer is accepted. Closing day itself may take several hours, with both sellers and buyers and their representatives in attendance.

Buying a home is no small undertaking, but the rewards are well worth it. It’s an opportunity to create a space that’s all yours and build financial security for the future. While getting to closing day may take a lot of work, at the end of the journey you’ll be a proud homeowner.

 Article courtesy of Lisa Walker