Buying a home is a big part of the American dream. For first-time homebuyers, it signals a significant step in that dream. For those who have been through the process before, it may mean they are getting closer to owning their dream home.
The process can be nerve-wracking and exciting, but taking some steps can help buyers stay calm and avoid mistakes.
According to Gina Piper, the founder / owner and broker associate of Elation Real Estate, who's been selling real estate in the Tri-Valley for 27 years, buyers should follow these steps before house hunting:
1. Determine your budget.
"Before you start looking at homes, it's important to know how much you can afford," Piper said. "Consider your income, expenses and any existing debts. This will help you set a realistic budget for your home purchase."
Sites like NerdWallet and My Home by FreddieMac provide calculators that allow you to plug in some basic expenses and calculate your debt-to-income ratio. Lenders use this ratio to decide how much you can spend on a mortgage and how risky it is to lend to you.
2. Save money for a down payment.
"Most lenders require a down payment when buying a home," said Piper. "It's generally recommended to save at least 20% of the home's purchase price for a down payment. However, there are also options available for lower down payments, so it's essential to explore different loan programs."
3. If you haven't already, check your credit score.
Piper said "Your credit score plays a significant role in determining your eligibility for a mortgage and the interest rate you'll receive. Make sure to review your credit report and address any errors or issues before applying for a loan."
Federal law requires that you be able to get a free credit report every 12 months at AnnualCreditReport.com. In addition, you may find that your bank or one of your credit card companies provides a free service for you to get your credit score.
4. Get preapproved for a mortgage.
"Getting preapproved for a mortgage will give you a clear idea of how much you can borrow and what your interest rate will be," Piper said. "This step will also make you a more attractive buyer to sellers."
To get preapproved, gather necessary financial documentation, such as proof of income, banking information and tax forms, according to NerdWallet. Then contact several lenders so you can compare offers.
5. Hire a real estate agent.
"Working with a professional real estate agent can make the homebuying process much easier," Piper said. "They can help you find suitable properties, negotiate offers and guide you through the closing process."
She added that, especially in today's market, it's crucial to have the help of an experienced, local agent.
"Buying in the Tri-Valley can be quite challenging due to the prevalence of multiple offers and the decision of whether or not to include contingencies in your offer," Piper said. "Waiving all contingencies can be a significant risk, but in many cases, it may be the only way to have your offer accepted."
Finally, it's time for the main event: house hunting. Once you've lined up a preapproval and a real estate agent, you can start looking for your home.
"Consider your needs, preferences and location preferences when searching for properties, and be sure to articulate this to your trusted Realtor," Piper said.
Elation Real Estate with offices in Danville and Pleasanton, offers a "boutique feel with world-class results." With more than 30 years buying and selling homes in the Tri-Valley, the Elation team guides new and experienced home buyers and sellers through every step of the process.