home buyers guide

The Ultimate Home Buyers Guide

Buying your first home will be one of the most significant moments in your life. It’s a huge step toward stability and financial happiness. But if you’re like most first-time home buyers, you have no idea how to do it.

To make things easier, we’ve put together the ultimate home buyers guide to get you started off on the right foot. Don’t be intimidated, it’s easier than you think.

So, read on and become a home buying expert with this article provided by our team or Chicago Real Estate Agents.

But first.

Are You Actually Ready to Buy a Home?

We don’t mean to insult you. We know you wouldn’t be reading this if you didn’t think you were ready. But buying a home is a big deal, and it deserves a lot of thought.

If you have a steady career, money in the bank, and a desire to settle down, then by all means, buy a house. But if you’re uncertain, there’s no shame in renting. And in competitive buying markets, renting might actually make more sense.

If you’re still confused, this tool is a good place to start.

Save up for a Down Payment

So you decided you’re ready to buy a home. Now, you need to figure out how to pay for it.

If you’re like most buyers, you’ll take out a mortgage. But even with a mortgage, you’ll need to have a lot of cash on hand to make the down payment.

To get a low-interest rate loan, you’ll want to make a down payment of at least 10% of the house’s value. With the median American home selling for more than $300,000, that’ll be thousands of dollars

Yes, it’s true you can take out a mortgage with a smaller down payment, and we’ll talk more about that below. But if you have good credit and want a low-interest rate, 10% should be your goal.

Start Shopping Around for a Mortgage

But you haven’t even chosen your new house yet! We know. But trust us. It’s important that you talk to lenders and get pre-approved for a loan before you start your house search.

Note that we said ‘lenders’ not ‘lender’. Take your time and talk to as many lenders as possible; you want options. With interest rates on sums this large, every fraction of a percent counts.

Prepare all your financial documents to make your search easier. You should even bring proof of employment and a list of references.

This is also when you’ll be deciding which type of loan to take out. Again, if you have good credit and a large down payment saved up, you probably want to go with a low-interest conventional loan.

If your financial situation isn’t quite as rosy, an FHA loan may be a good option. You’ll only need to pay 3.5% of the loan value for your down payment and interest rates are very reasonable. The downside is that you’ll have to pay for mortgage insurance.

There are other options for buyers with special circumstances, such as the VA loan for veterans and the USDA loans for rural buyers.

The best way to prepare yourself for this process is by doing some extra research on the mortgage process before you set out.

Ultimately, your goal is to be pre-approved for a mortgage before you start shopping. That way, you’ll know how much you can afford to spend on a house, and sellers will know you’re trustworthy.

Start Your Search

You’ve finally arrived at the fun part. But try to keep a cool head on your shoulders. It’s easy to get carried away and make mistakes.

Remember that it’s ok to look for a house that costs less than your pre-approved loan amount. Once you’re living in a new house, you’ll be paying for a lot more than you realize. On top of your mortgage, you’ll be paying insurance, taxes, and maintenance, not to mention the initial cost of furnishing your new home.

Rather than aim for the most expensive house, look for a house with good value. A house is an investment after all.

Investigate any projects the city is planning to build in your area. A new park could increase the value of your home, while a new overpass could mean trouble.

Pay attention to the quality of local schools even if you don’t have kids. School quality not only raises your home value in the long term, it’s also a good indicator of the area’s overall economic health.

And, of course, make sure you like the neighborhood.

What about the house itself?

Make sure your new house has a great kitchen and nice bathrooms. Other rooms can be spruced up with new furniture and a paint job, but remodeling a kitchen or bathroom is difficult and expensive.

Don’t get tricked into buying a fixer-upper. Little fixes here and there will add up, and if the fixes were easy, the seller probably would have taken care of them.

Choose a house with natural light and a tasteful floor plan. You want your new house to feel good, right?

And, remember, you don’t need to do all this alone.

Find a good realtor to help you out. Now, we know what you’re thinking. Why do you need a realtor in the age of online real estate?

First, a realtor can provide you with advice and local knowledge that you’d never be able to find online. Second, having a realtor will be hugely beneficial in the final negotiation process. And third, you won’t actually have to pay for a realtor because their salary comes out of the sales commision.

Your Ultimate Home Buyers Guide

Now that you’ve read our ultimate home buyers guide, you’re ready to start your journey toward homeownership. But, just to be safe, we recommend you read it over again. This is a big decision after all.

If you have any further questions about the process, don’t hesitate to contact us. And if you’re looking for a home in the Chicago area, we’d love to work with you. Let’s start today!