Being a first-time homebuyer can be difficult. There are many things to consider, including your budget, preferred mortgage company, and ideal neighborhood. When you’re embarking on this unfamiliar journey for the first time, it can be reassuring to know what to expect. From verifying your income to dealing with competition, here are six important things every first-time homebuyer should know.
1. Be Prepared to Verify Your Income
Before your mortgage lender agrees to give you a loan, they’ll most likely require you to verify your income. Verification of income is one way lenders minimize their risk when extending financing to borrowers. Be prepared to prove that you earn a stable income by showing your lender a few basic documents. These include your most recent W-2 form, two recent pay stubs, and federal tax returns from the previous two years.
To optimize your approval chances, you should not have any employment gaps within the last two years. If you recently changed jobs, your lender may request a proof of income letter from your current employer. The purpose of all this documentation is to boost the lender’s confidence in your ability to pay your mortgage.
2. Don’t Skip the Preapproval Process
If this is your first time purchasing a home, you may underestimate the importance of getting preapproved. It’s understandable if preapproval seems like an unnecessary and cumbersome procedure for someone who’s unfamiliar with it. But this optional step can make the rest of the home-buying process go more smoothly. It can also convey to sellers that you’re serious about purchasing a house and are unlikely to waste their time.
There’s no need to get preapproved if you’re casually perusing homes online. But when you’re ready to get serious about your search for a new living destination, visit your lender first. Once you’re preapproved, you’ll be able to budget for a property more accurately. You’ll also know what interest rate you’ll receive on your loan. This information will help you determine what price ranges you can comfortably afford.
3. It’s Normal to Feel Nervous
It’s natural to be nervous when you’re buying your first home. After all, this is one of the most significant financial decisions you will ever make. You’d be a little naive if you didn’t experience some trepidation while navigating the process of buying a house. Some nervousness is beneficial and can help you avoid making an unwise purchase.
The more you understand about the home-buying process, the more your nerves will begin to settle. To boost your confidence, make sure you’re buying a home that’s in good condition, fairly priced, and fits your budget.
4. A Home Can Look Much Different From Photos
There’s an old saying that a picture is worth a thousand words. While that may be true, a picture shouldn’t become a substitute for viewing a home in person. Expert photographers know how to use optimal lighting and photo angles to make any house look fabulous. For this reason, you shouldn’t rely on photos alone when house hunting.
Even if you fall in love with a house based on the listing photos, never stop there. You don’t want to pull the trigger on the home-buying process until you see the house with your own eyes. You may discover that you don’t really like the place once you’ve toured it in person. Or you may learn that a house looks even better in real life than in listing photos.
5. Expect Competition
Many first-time house hunters have an unrealistic view of the home-buying process. They assume that once they find the ideal property, they can simply buy it and live happily ever after. But the reality of buying a house is often much different. It’s common for prospective buyers to face intense competition, especially if the house in question has a competitive listing.
When you locate an attractive home with an equally attractive price, you can expect other people to want it too. Keep this in mind when making an offer on a popular property and make sure you act quickly! Dragging your feet could cause you to lose the home to a more motivated buyer. If this happens to you, try not to get too discouraged. There are most likely multiple properties for sale that meet your ideals.
6. A Real Estate Agent Makes Things Easier
When you’re buying a house for the first time, it’s easy to become totally overwhelmed. In addition to the complicated process of putting in an offer, you also need to navigate stacks of closing paperwork. It can be intimidating to do all of this by yourself.
Fortunately, you don’t have to. Most first-time homebuyers choose to work with a realtor who knows the ins and outs of buying a home. A good realtor can explain everything to you so you’re not walking blindly into the biggest purchase of your life.
A real estate agent is not just a cashier who facilitates the transaction of buying a home. Your agent will also become your consultant and cheerleader. A good agent knows how to locate homes that fit your budget and your lifestyle. Your agent will also explain the closing process, help you make offers on homes, and act as a skilled negotiator.
Don’t let the complicated process of buying a property scare you away from getting the home of your dreams. The first house you buy will hold a special place in your heart for years to come. Make sure the experience is as positive as possible by learning everything you can about the home-buying process in advance.
Disclaimer: This content does not necessarily represent the views of IWB.