Starting your first home search is an exciting process! Even though most people realize there’s more to buying their first home than just finding their first home the process can be confusing. There are so many things that first time home buyers won’t know to ask, so we created this post as a guideline!
Here are the top 8 things first time home buyers forget to ask. Make a list so you remember what needs to get done when you start your home buying journey.
1. Get Pre Approved!
The first thing we want to cover is that looking at houses is not the first step! You need to get pre approved before you look at homes or even find a realtor. Know how much you can spend on a home and then you can start your house search.
Once you’re pre approved you have a budget to work with. The next criteria is usually where you want to live. Location usually wins over anything else, so decide which area you want to live in. This can be based on school zones, proximity to work, or even a neighborhood preference.
Understand that once you decide on a location, you don’t need to look at homes outside of this area. Even if you find the perfect home, you won’t want to buy it if it isn’t in the right location.
2. Find a Realtor
Once you are pre approved and have decided on a location for your housing budget, the next step is to find a realtor! A lot of times first time home buyers think they can’t afford to hire a realtor. They don’t know that the seller’s listing agent covers the fee for the buyer’s agent! So don’t use this as an excuse not to find a realtor.
Buying a home will be the biggest transaction of your life, so make sure you have someone to help guide you through it. Don’t try to buy your first home without an expert. You will need a realtor not only to navigate you through the contract and closing process, but also to advise you on the real estate market.
One thing that I like to tell my clients is that as we mentioned above, once you choose the location, nothing outside of this matters. So the next step is to know the difference between what you want and what you need. Don’t look at houses that don’t meet your criteria, because then you will have a conflict when looking at other homes. Especially if those homes aren’t in your designated location.
3. What is Earnest Money?
When you find a house that you like, it’s time to make an offer! But a lot of times first time home buyers don’t know that you submit earnest money along with the offer. Earnest money is a check in the amount of 1-2% of the price of the home. Earnest money is similar to putting down a deposit, or good faith, to show that you are serious about buying the home.
In the state of Alabama, earnest money isn’t required, but when buyers add earnest money to their offer it shows the seller that they are serious buyers and it makes their offer stronger. It’s important for buyers to understand that once they go under contract, the earnest money check is deposited and held towards closing.
If buyers don’t end up buying the house, a lot of times they end up losing the earnest money they put down. Buyers may walk away from the house later on due to home inspection results or something that changes on their end that prevents them from moving.
4. Submitting Offers: Concessions and Contingencies
Once you have your check for earnest money, you’ll need to work with your realtor on the offer. You need to make sure that you completely understand your offer and include everything you want it in.
You may need to include contingencies on your offer if you don’t have answers to certain questions yet. For example, if you want a fence added to the property then you can add a contingency to your offer to ensure that a fence can be added to the property. Just be aware that contingencies aren’t as strong as offers without contingencies.
Ask questions about the contract if you don’t understand it and be sure you know the days in a contract for inspections to be done. Understand that you cannot just change a contract, all parties must agree on any changes made.
5. Closing Process
Once your offer has been accepted you go under contract, meaning you are in the closing process! While this is exciting, it doesn’t quite mean you have your home just yet. During the closing process a lot of things need to take place like inspections, which we will cover in the next section.
The executed contract will be sent to all parties, including the title company. Your realtor will take care of this. You as the buyer now need to send any required documents to your loan company, which they will specify.
Now is also the time to transfer your utilities and cable for the closing date, change your postal address, and if needed, find moving companies! Ask your realtor about a home warranty and why you should ask the seller for this.
There are so many things that you need to make sure happen when you buy a home, which reinforces your need for a knowledgeable realtor. Want to learn more about the closing process? Read this post where we cover what to know during the closing on a home!
6. Inspections
When you’re in the closing process it’s important to make a list of inspections that need to be done along with a list of dates for these inspections. As a buyer, you will have a certain amount of time to get the inspections completed. These inspections will also come out of your pocket.
The main inspection you will need to schedule is the home inspection. Since the closing process typically takes 30 days, be sure you know in advance when the home inspection needs to take place.
Make sure you talk with your realtor on when this needs to be done and make sure it happens! The home inspection could result in other inspections such as a pest, roof, HVAC, wood infestation, or fireplace inspection.
Ask your realtor why you may need these inspections done. Read this post on what to look for during a home inspection before buying to learn more about the home inspection process.
7. Money Questions
Buying a home can raise a lot of money questions. Even when you’re pre approved and find a mortgage that’s right for your needs, there are more money questions to tackle!
You will need to get a quote for homeowners insurance. Just like a mortgage, don’t receive just one quote from one company and settle. Be sure you explore your options and find what’s right for you. There are many offers for first time home buyers that will save you money!
Save as much cash as you can during your home buying process. You will need cash to cover closing costs if this isn’t covered in your mortgage. Also ask about the average utilities and any HOA fees (homeowners association) that come with the property.
If the house has been used as a rental property at any time then it will be home steadied, so the taxes may be higher. This cannot be changed until the renewal period, which starts on October 1st.
8. Don’t Forget about Moving Costs!
After you finish closing on your home you still need to make sure that you have money to cover any moving costs or utility transfers! Click here for some moving tips to make the moving process easier!
You still need to have money in savings for any extra costs. So when you plan your finances for buying a home, be sure you account for this. New homeowners often forget that any maintenance or repairs needed for their home come out of their pockets. So have a reserve fund just in case anything pops up!
Ready to Start the Home Buying Process?
If you’re a first time homebuyer in the Birmingham, Alabama area let us know! We love helping first time buyers along the process of finding their dream home!
Call Dianna Howell of The Howell Group at: 205-568-5435 or email her at: dianna.howell@kw.com
For more information on what homebuyers need to know, see this post where we go over a few different things! We also have a list of real estate words for beginners in this post so you can learn the real estate lingo!
