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1.                  Are You Ready? – In addition to a down payment, you also need cash for closing costs.  Several loan programs may help with these costs.  You may also be able to make this a negotiating point in the offer you put on a property.

2.                 Hire a Buyer’s Agent – Be sure you’re working with a true professional and someone you feel comfortable with.  A Buyer’s Agent insures you are being fully represented in a transaction.

3.                 Get A Loan Pre-Approval – The real issue with real estate financing is not just getting a loan, but getting the loan that’s right for you.  Meet with lenders to find out how much you can afford and find out which programs are available.

4.                 Look at Homes – Before you look, list the features and benefits you want in a home.  Consider pricing, location, size, layout and extras.  Decide what’s most important and how much you’re willing to compromise.

5.                 Choose a Home – Review you notes to narrow down the choices.  When you find the home of your dreams, your Buyer’s Agent can help you be sure it is a good fit for you and your family.  It is also a part of your Buyer’s Agents job to help you consider all of the pros and cons of the property including its future resale value.

6.                 Get Funding – The mortgage you choose will be determined by how much down payment you can afford, your credit rating, and your income.  Shop around with mortgage brokers, banks, and credit unions to find the financing that works for you.

7.                 Make an Offer – An offer is more than just the price you’re willing to pay.  It also includes the terms and timeline of the agreement.  Sellers may accept the offer, reject it or make a counter-offer.

8.                Get Insurance – Shop around for homeowner’s insurance.  Ask your Buyer’s Agent which other insurance policies may be required for your new home.

9.                 Closing – This is the official meeting where the transaction happens.  A closing attorney will make sure all of the required paperwork is complete.  Then it’s official.  You get your new keys!

10.            What’s Next? – Transfer your utilities, move in, check out the neighborhood and enjoy your new home!

You’ve probably already heard that before you start your search for your first home you should establish how much you can afford to spend.  But many potential home buyers don’t know where to start to figure this out. 

Here are some tips:

Figure out your DTI:

Many lenders use your Debt to Income ratio (DTI) to figure out how much they are willing to let you borrow.  Contact a mortgage professional to get pre-approved and find out what a lender is willing to lend you.

The Lender is going to tell you the maximums:

Just because you qualify for a certain amount doesn’t mean you can actually afford that amount.  You need to examine your expenses and lifestyle to see whether you can and are willing to pay the maximum month after month.  Think about what other major expenses you are responsible for, i.e. auto repair bills, educational costs, high medical expenses, etc. and factor these in to what you want to borrow.

The Loan Amount Isn’t the Only Monthly Payment:

While it is extremely important to figure out what your monthly principle and interest payment is to the lender, you also need to factor in monthly amounts for property taxes, home owners insurance and home owners association dues.  Also find out what average utility costs are in the area you are considering.  Add all of these costs to the monthly mortgage payment to figure out what you total fixed housing expenses will be.

Things Come Up, Don’t put all of your money into your new home:

Plan on having several months’ worth of income put away in your savings account just for emergencies.  You should allow for money towards start up costs.  Inevitably, when you move into your new home you’ll be spending money on paint, new furniture, window treatments, new tools and equipment.  These things should be factored into your housing plan.

Think Down the Road:

What’s in your future?  Are you considering growing the family a bit? Is College in your plans? What other major expenses are you considering?  Take into consideration unforeseen events such as job loss or health challenges.  Having thought through these may result in a more conservative approach to buying your first home.