Know you want to buy your first home? Here’s what to do right now:
1. Financially prepare
- Obtain a copy of and review your credit report. Clear up any errors.
- Keep your bank accounts clean. Hold off on any large purchases or un-ordinary transfers into and out of your accounts. Your mortgage company will question everything they see, so keep your accounts “business as usual” during this process.
- Do not open any new credit card lines. New credit inquiries will negatively affect your credit score.
- Do not quit your job. Job longevity counts!
2. Find a mortgage lender and get pre-approved
- Research mortgage lenders. Ask your real estate agent or a friend who has bought for a recommendation. Reputation is important; a local mortgage lender is usually preferred by a seller over a large national bank, who tend to have more red tape that elongates the process. Tell the lender you are thinking of buying a home and need to get pre-approved.
- Learn about the types of mortgage loans. Review with your lender the types of loans that you could qualify for and the corresponding down payment that will be necessary for each.
- Obtain a pre-approval letter. The mortgage company will collect your pay stubs, 1-2 years of tax returns, bank account statements, loan info and any other relevant financial documentation they need to qualify you. They will then issue you a letter stating the maximum home price for which you’re likely to be approved for a mortgage.
- Determine your budget. Prepare a budget including your approximate monthly mortgage amount plus taxes, homeowners insurance, HOA/condo fee (if applicable) and maintenance. Your mortgage lender or real estate agent can help you crunch these numbers. Through this exercise you may find that your pre-approval amount is much more than what you’re willing to spend for housing on a monthly basis. In this case, keep your search to homes under a list price that keeps your costs at a range in which you’re comfortable.
Note: Your real estate agent will need to submit your pre-approval letter with any offer you make on a home, as it shows that you are a qualified buyer who is in a good financial position to purchase. It is for this reason that it is recommended that you have a mortgage professional assess your finances and give you a pre-approval before you commence your housing search.
3. Choose a real estate agent
- Find an agent. There are thousands of real estate agents in MA, but the quality of professionals varies greatly. Choose an agent who will take the time to walk you through the process and make a complex transaction easy to understand. He or she should be well-acquainted with the neighborhood(s) you are considering, or at least willing to get acquainted! Referrals from friends, family or colleagues are almost always the best way to find that talented agent with the right mix of experience, patience and understanding.
- Review your property criteria. Once you choose an agent, you will meet to discuss what type of property you’re looking for (such as condo, single family or multi-family) so they can appropriately target your search. You will review your pre-approved budget, desired number of beds and baths, target neighborhood(s), and property must-haves (parking, outdoor space, storage, etc.).
- Get property listing alerts from MLS and other online sources. After your initial meeting, your agent will then take your housing criteria and set you up to receive property listing alerts from the Multiple Listing Service (MLS) and/or their own website. MLS is the official system used by realtors for all real estate transactions (excluding private or “for sale by owner” properties) and has the most accurate and up-to-date listing information. You will receive an email alert when a new listing matching your search criteria comes on the market. And to be sure you are getting the complete picture of market inventory, you will want to receive listings that do not necessarily show up on the MLS. You can register with us anytime to receive these properties in a timely fashion. Your account will allow you to receive all listings available, adjust your search criteria, schedule showings and more!
- View properties in person. When you see a property that you feel is a good match, let your real estate agent know right away. He or she will call the corresponding listing agent and get you the “inside scoop” on the home and set up a time for you to view the listing in person (or arrange for you to attend an open house). As Boston-metro is a very competitive market, often listings are on the market for only a few days before an offer is accepted. It is for this reason that it is crucial to act right away when you see a property that may be a perfect match.
Looking ahead: Next steps
- Making and negotiating an Offer to Purchase
- Completing a home inspection
- Choosing a real estate attorney
- Reviewing and signing the Purchase and Sale
- Mortgage application & approval
- Closing the sale
Ready to get Started? Contact Us anytime to get you on the track to finding your next home!