ATTENTION FIRST-TIME HOMEBUYERS!!!
Despite Covid, even first-timers are joining the housing market, and although showings and open houses are limited due the virus, buying a home in 2020 is a High IQ move.
Knowing that, we made this guide for you. Before searching for the home of your dreams, make sure you are ready for the home buying process.
Step 1. Get financially prepared
As you may know, having savings is important, it helps with the down payment, and other incorporated costs that come with purchasing a home such as closing costs, repairs, and appliance replacements, if needed.
Usually, financial planners suggest having three to six months' worth of living expenses on a savings account, however, due to the pandemic, you should have more saved because buyers have to stay ready in case covid wipes out their job.
Also, now is the time to take care of your credit. Don't skip any payment or apply for loans; lenders rely on your credit score to decide how much, and at what rate, they will lend you money.
Step 2. Make sure you know what you want
There are multiple housing types, and buyers can snag good deals on older homes that might need need to undergo renovations, or have sat on the market for too long. Other options are foreclosures, or short sales, which are properties that are sold for less than the amount owners owe on the mortgage.
Step 3. Find a real estate agent
Even though face-to-face meetings are unadvisable, find a digital way to approach a real estate agent or broker. Try to meet over the phone, or suggest a zoom meeting. Remember, as the buyer, you don't have to pay for the agent; the seller pays for both the seller's and buyer's agents' fees!
Step 4. Get pre-approved
Getting pre-approved means a lender has agreed to loan a buyer an amount of money, in this case, to purchase a home. Doing this is important, especially now since most lender's requirements are tighter. It'll also give you a maximum spending limit, which should make your house hunt easier. It's also a strong bargaining chip. It makes an offer much stronger when a seller thinks you're more ready to buy than the other guy, and will likely accept your cash offer while the other guy rushes to get approved.
Step 5. Prepare a budget
The most common mistake the first-home buyers make is assuming that the pre-approval is their budget. Take into account that you can spend much less than that, your maximum limit does not mean you are fine with spending that much money, nor that your should. Remember you still need to cover other expenses, such as maintenance, utilities, taxes, etc. Plus, you could put that hard earned money to work. Home equity isn't the only good debt...
Step 6. Find first-time homebuyer programs
There are federal, state, and local programs that help first-time buyers to understand what financial responsibilities come with homeownership. Investing time into learning more about it most likely will save you money. During the pandemic, these programs can be taken online. With regards to all of this, make sure to ask your agent for guidance. They're not lawyers, and are legally barred from giving legal advice, but they can help point you in the right direction!