With Halloween and all its thrills & chills behind us, there is nothing scary about buying your first home. First time buyers may feel overwhelmed and nervous about this seemingly scary process. But, never fear, buying your first home can be as easy as (pumpkin!) pie. Here are 10 great tips to get started and help make your home buying process so much easier:
1. Your journey begins with finding the right community and location, one that meets your needs. For example, is it close to work, shopping, restaurants, etc.? Are you looking for a good school system? What are taxes and HOA fees like? You can usually find this info online or you can ask your Realtor or new home builder in the community you’re considering.
2. Make a budget; include where you want to be as far as a monthly mortgage payment. Add all your monthly bills and debt payments to see if you meet your monthly expenses goal.
3. Make sure you have saved enough money for your down payment and closing costs. For example, if you purchase a $300K home, you would need at least 3% down payment in addition to closing costs which can vary from 2% to 4% of the sales price.
4. Once you have decided on the area, know your budget, and have money saved for your down payment and closing costs, you are ready to shop for a lender to borrow the funds needed to purchase the home of your dreams. Usually buyers go to their bank or credit union for their mortgage needs, but with so many choices out there it can be confusing. A good way to decide on a mortgage lender is by interviewing them. Let them compete for your business and compare lending fees which can vary greatly. Shop for low interest rates you may qualify for. Many new home builders, including us here at Dunn & Stone, have preferred lenders that we can recommend. Some lenders offer to pay for the Owner Title Policy premium (OTP) at closing, while others offer to waive their lending fees. They want your business and will compete for it. But most importantly, be sure they provide you with the quality service and vital communication you expect and deserve.
5. Once you are pre-approved for a mortgage loan your lender will provide a letter stating the price range and terms you discussed and can feel comfortable with. Now you are ready to go shopping!
6. You can begin with visiting communities on your own or hire a real estate professional to guide you whether you are interested in resale used homes or new homes. As a new home builder, the advantage of building with Dunn & Stone is warranty, warranty, warranty. Most new home builders offer a 1-2-10 year warranty. The one year warranty covers visible defects for your first full year after closing. This does not include maintenance items such as replacing HVAC filters, watering your landscaping, etc. The two year warranty covers items behind the walls such as electrical, plumbing, and HVAC. The ten year warranty covers structural issues related to foundation, walls, and roof. This coverage is offered through a third party provider.
7. When searching for your dream home, do some research. How big of a home do you need? Are you downsizing or do you need a bigger home to accommodate a growing family? New home builders usually have plenty of plans to choose from and here at Dunn & Stone buyers have the option to semi-customize plans to better fit their needs. This option is not usually available with other builders.
8. Your dream home will fall into one of three categories: a resale home, an inventory home, or a new built home. A resale home is one that has already been lived in and you will most likely purchase it from an individual. An inventory home (or SPEC home) is a new, never lived in home built by a builder that is finished and ready for move-in. You may be able to find a great deal depending on how long the inventory home has been on the market. A new built home is one that you are involved in from the ground up. You pick your lot and your plan from the builder, you choose the colors, finishes and upgrades you want to reflect your style.
9. Hooray! The day to close on you dream home is here! You will sign the papers at the title company and deliver to them your cashier’s check or have the funds wire-transferred for your down payment and all closing costs. Remember the old saying “show me the bottom line”? Well, that rings true in this instance because the lender sends you the closing documents (CD) approximately one to two days before you close the deal indicating the bottom line dollar figure needed to complete the transaction.
10. Once the title company collects all the funds and signing is complete it takes roughly one to three hours for bank funds to post. Upon completion, the keys to your dream home will be available for pick up.
Congratulations! As I said in the beginning, it’s not scary. These tips are quick and easy. Once you have assembled your team – lender, real estate agent, new home sales consultant, builder, and title company it should result in a wonderful and fun journey to home ownership.