Buying your first home can be a daunting process! It will certainly feel overwhelming, especially with everything going on in our personal lives – work, friends, family, kids, school, etc. It is all challenging to manage, throw in the process of buying a home on top, and you might feel like your head is going to explode!
No worries though, we are here to help you out and help ensure the process goes as smoothly as possible! I am a licensed real estate agent with Streett Hopkins in Bel Air, Maryland. We are a full service brokerage, able to help you out with all of our residential and commercial needs. Since we are smaller, we can focus on you, developing a relationship, and guiding you through the home buying process. We’ll help you find your perfect home in Harford County in areas such as Bel Air, Forest Hill, Fallston, Churchville, Aberdeen, and so on.
One of the first things you will want to do is get an assessment of your finances. Part of this is checking your credit score and saving towards a down payment. You can get a free credit score check on Experian. If your credit score needs work, you can do things such as pay down debts and pay your bills on time. During this step, you can also get an idea of what you can afford prior to talking with mortgage lenders. You can use mortgage calculators to give you a rough estimate. This also gives you a ballpark idea of where you are at in price before talking with an agent. We offer a free affordabilty calculator on our home page.
After taking an assessment of your personal finances, it may be in your interest to find a real estate agent in Harford County that you trust. You do not have to work with an agent, but it is recommended unless you are highly experienced. An agent will be able to guide you through the process and handle many of the tasks in finding you a home. An agent knows the area, they will get you in to show you properties based on your criteria, assist with negotiations and inspections, and guide you through the closing process. They can also help you out in finding mortgage lenders to work with.
You can start this process before you have an agent, but you should now be ready to start the preapproval process. This is important to know how much home you can afford and what you can shop for. You’ll want to talk with different lenders to make sure you are getting the best possible rates.
There are four basic types of mortgage home buyers use: conventional, FHA, VA, and USDA. Conventional mortgages are the standard loans that are typically used by buyers that have strong credit and make a larger down payment. However, there are also programs that are available for home buyers with lower credit scores and smaller down payments. FHA (Federal Housing Requirement) loans offer down payments as low as 3.5%. The downside of FHA loans is that they require annual mortgage insurance premiums, which could result in higher overall costs. There are also VA mortgage loans and USDA Mortgages which could be available if you quality. There are also state home loan grant programs available, which could be a great resource for those just starting out. You can find more information on these loan programs by visiting First Home Mortgage. A mortgage lender will be happy to walk you through the process and determine which option is best for you.
No matter which mortgage you decide to go with, you will have monthly payments on your new home. The monthly payments will consist of principal, interest, taxes, and insurance. The principal and interest are the bulk of your monthly payments. The principal portion goes towards paying down the balance of the loan. With each payment, your equity in the property will typically grow. The interest portion of your payment is the fee that you pay to the lender for letting them use their money. The last two items are taxes and insurance. Taxes are the amount owed to your city and county taxes. Insurance is the coverage that you’ll need to cover any hazards that may happen with your home. All 4 of these items – principal, interest, taxes, insurance – combine to make up your monthly mortgage payment. This payment can typically be set up to auto draft from your checking account so that you do not need to worry about missing these payments.
Now that you’ve been preapproved, have your ideal home in mind, the fun part begins. You can now start viewing properties! You’ll work with your agent to determine which ones you would like to view based on your criteria. Walk the properties and make notes of things that you liked, maybe things you didn’t like, and begin to compile your notes. Once you’ve found your perfect home, in the perfect location, work with your agent to put your offer in.
When putting in your offer, determine what typical homes in that area are selling for. List price and completed solds are two different discussions and you’ll want to make sure that the property is appropriately priced. From that point, work with your agent to determine a price that you’re comfortable offering at. Just because you are preapproved for a certain number, this does not mean that you will necessarily want to go that high. It is always best to have a buffer in your monthly payments in case of any emergencies.
In your offer, you may have contingencies such as home inspection, financing, appraisal. These are put in place to allow you to get out of a deal if an issue were to arise. For example, an issue arises in the home inspection that was not known before entering into a purchase agreement. A contingency would allow you to get out of the deal and receive your deposit money back.
Once your comfortable with the terms of your offer, it is time to submit it. Upon submitting your offer, you’ll also submit an earnest money deposit. This is an upfront deposit to show the seller that you are serious about buying. At the end, your deposit will go towards your down payment or closing costs. The seller will either accept or counter your offer. A good agent will represent you and help out in the negotiations.
Finally! You and the seller have agreed to terms and you have the house of your dreams under contract. Now, it is time for you to work with your agent in working towards your goal – getting the keys to your house. You’ll work with your agent in getting the home inspection set up. This will help determine if there are any unforeseen issues with the house. If there are any issues, you can sometimes work with the seller to take care of those items. You definitely do not want to be dealing with a leaky roof once you take over ownership. You’ll also want to get homeowners insurance set up for your new home. Often overlooked is getting all of your utilities set up – electric, water, trash, cable, internet, etc. Your agent can help you in getting information on these items.
While under contract, you’ll also want to finalize the loan details with your lender. They’ll run a final credit check on you and you’ll definitely want to try and avoid any major purchases during this time, as this can have a negative effect on your credit score. The lender will also complete an appraisal on the property to confirm that it is worth what you have agreed to pay the seller. Lastly, the lender will provide you 3 days in advance with the final closing costs that you will need to pay on closing day. These costs commonly include title insurance, attorney fees, home inspection fees, recording fees, and taxes.
You're almost there! You and your agent have worked through every detail to get to closing day. Finally! At closing will be your agent, the lender, and seller. You’ll go over all the contracts and sign off on them. You’ll pay for down payment and closing fees. Once that is all done, you finally have the keys to your new dream home in Harford County, MD!
I tried to cover every little detail, but that is pretty hard to do with one of the biggest purchases you might make. You will definitely have questions and concerns as you go along in the process. For those that prefer visuals, click here for a free copy of an infographic. It gives you a step by step look on the process! Feel free to reach out to us at Streett Hopkins Real Estate in Bel Air, MD and we will be happy to help you out throughout the process!
