1. Ask yourself a lot of questions
The first step in purchasing real estate is knowing what you want! It is imperative that you enter the process knowing yourself, your situation, and what you’re looking for.
A few questions that you should ask yourself before you begin your search are:
-What kind of location do you need?
-What type of property are you looking for?
-Do you need to buy, or could you lease the property?
-What’s your situation regarding cash, financing, and/or ability to make a down payment?
-How much time can you commit to the property?
-How much work are you willing to put into the property?
2. Learn some real estate vocabulary
Here are ten real estate terms you should know and understand before you start looking for a home. Educating yourself on the jargon will not only make you more confident throughout the process, but it can also ensure that you don’t miss the necessary steps that could cost you a fortune in the future.
Here are some standard terms to get started with:
Buyer’s Agent vs. Listing Agent: There are usually two agents involved when you buy a home; the “buyer’s agent,” who represents you, and the “listing agent,” who represents the home seller. One thing many people don’t realize is that when buying a home, you don’t have to pay your real estate agent; they’ll get a commission from the home seller.
Fixed-Rate vs. Adjustable Rate Mortgages: A fixed-rate mortgage has a predetermined interest rate throughout the life of the loan; the most common are for 30 years. An adjustable-rate mortgage has a variable interest rate; the most common are for 5, 7, or 10 years.
Pre-approval Letter: Before you apply for a mortgage or even start looking for a home, you should get a pre-approval letter from the bank, which is an estimate of how much they’ll lend you. This letter will help you determine what you can afford and ensures home sellers that you will be able to get a loan when needed.
Appraisal: When you apply for a mortgage, your lender will require an appraisal of the home you want to buy. A licensed appraiser will estimate the home’s value based on comparable homes that have sold in the area and an investigation of the property.
Click here to learn about more real estate vocabulary.
3. Visit and consider many properties.
Do your homework on each! Before you make an offer on the house, it pays to ask a handful of questions. While the answers might scare you off or make you rethink your bid, they could make you feel more confident that you’re making the right move on the right house. Tour as many different properties as possible, and most importantly, don’t rush anything! Figure out what works and what doesn’t about each of them for you. Consider the most important things for each one including price, location and condition. Above all, you’re searching for a “match” with your property. Your situation and needs are unique.
Here is an extensive checklist of helpful questions to ask while touring properties.
4. Find experts.
A professional has the skill and experience to guide you as first time home buyers. They have key relationships with professionals like lenders, home inspectors, contractors, etc. They can guide you from start to finish and answer any questions you may have throughout the home buying process. Their goal is for you to have a smooth real estate transaction and have a positive home buying experience.
5. Figure out your financing
If you’re like most people, you’ll need to get some financing help to be able to purchase the your new home. What type of banks, credit unions, or other home mortgage company could you use? What kind of credit do you have, and what kind of interest rate could they give you? Answering those questions will put you on the right track for the financing process.