1. THE DOWN PAYMENT
Many new homeowners stress about putting large sums of money towards their first home. A sizeable down payment has a number of advantages, including lower payments and increased buying power, however, 3.5% of the purchase price is usually all that is required when using an FHA loan. There are even legitimate down payment assistance programs to help defray those costs.
Federal Housing Administration loans, more commonly known as FHA, are government backed program that expands access to home ownership. In addition lowering initial out-of-pocket expenses, FHA also provides loans for purchasing fixer-uppers and energy-efficient homes.
Contact me today to learn more about putting an FHA loan to work for you.
2. GETTING FINANCED
So you have your down payment, now what? Before you begin shopping for a home, buyers should contact a reputable lender to find out how much home they can afford. To get to this magic number, the bank will gather documentation in order to put together a complete financial picture of the buyer(s). Have ready two year’s of tax returns as well as your latest W2, pay stubs and asset statements (checking and savings statements as well as retirement and investment accounts). Depending on the lender, additional information may be required.
Should you choose a small bank or a large bank? My answer to this question is almost always a small community bank. Large, institutional banks often charge higher interest rates (something has to pay for all the fancy marketing) and can be much more difficult to navigate.
Need the name of helpful lenders? Having been around the block a few times, I can provide the names of lenders that will make the home buying process as smooth as possible.
3. FINDING A HOUSE
You have your down payment and have been pre-approved. Now the fun begins! Be forewarned, though, that finding a house can be overwhelming. There are nearly 6,000 homes for sale in Franklin and Delaware counties, and although inventory has shrunk in recent months, there are a myriad of options available. Start with a few simple tips in order to maximize your search time:
- Hone in on location. Do you need to be in a certain school district, or live close to work? Focus in on areas that meet your needs and you will begin to gain perspective.
- Define the style of home you desire. Does a quaint 1950s home suit the bill or is shiny and new more your style? Do you want a ranch or a two, or even three-story?
- Let your Realtor® help. Searching online is fun, for a while at least, but this is where it can become too much to handle. A good agent knows the market and has probably seen a fair number of homes listed for sale in your area. Define your criteria and put your agent to work for you! Your agent may even have the perfect home for you already in mind.
- Decide on key characteristics of the home. Things like the number of bedrooms, bathrooms and lot features (who doesn’t like a pool) can help further narrow your search.
4. MAKING THE OFFER
Many, ok every first time buyer I have ever worked with, get stressed at this point. It’s a huge decision and anxiety about making the commitment is completely normal. Have faith in your decision and rely on your real estate agent to minimize your worries.
5. MOVING IN
Now comes one of the best days of your life. Closing is scheduled. All that remains is signing papers and being handed the keys! Although just a tiny piece of metal, the keys grant you access to the place where you will make a lifetime of memories. Enjoy!