Buying your first home can be both exciting and daunting, especially in competitive markets. But with a bit of prep work and research, the process can go smoothly. Here's an overview of the steps to get you on your way to home ownership.
Step 1. Assemble your team
- Find a real estate broker who specializes in your specific area or neighborhood of interest
- Vet and line up a banker or mortgage broker, real estate lawyer and a home inspector
Step 2. Gather important documents
- Request your credit report from all three credit rating agencies: Experian, Equifax and TransUnion
- Assemble paperwork including tax returns, W-2 forms from the past two years, current pay stubs, bank statements from the past several months, current asset statements, and other relevant financial documents
- Apply for mortgage prequalification/preapproval*. This is key in competitive markets.
Step 3. Make a budget
- Learn about the down payment and closing costs associated with various property types. Closing costs for co-ops, for instance, are generally lower than those for townhouses or condos.
- Set aside cash to cover maintenance costs and mortgage payments for one to two years after purchase
- Budget for moving costs, renovations, taxes and everyday expenses
Step 4. Review mortgage options
- Weigh the pros and cons of different mortgage products. A 30-year fixed mortgage may not be ideal if you're only planning to stay for six years.
- Get prequalified/preapproved* for a mortgage with terms that make sense for you
Step 5. Start house hunting
- Sort through your list of must-haves. Research neighborhoods.
- Look at online listings, visit open houses and private showings to find your dream home
Step 6. Submit your offer and prepare for closing
- Discuss the closing process with your real estate broker, which may vary greatly by neighborhood or region
- Keep track of deadlines for any purchase contingencies or co-op board packages
- Arrange, complete and review the home inspection report and other disclosures
Like with any big financial decision, preparation is key. Having the right team behind you will help lead you to your goal, one step at a time.