You’ve spent countless hours obsessing over finding the perfect home, downloaded every homebuying app to your phone, signed up to receive selling status notifications on the homes you're interested in, and visited every single open house in the neighborhood of your choice. You've set your budget, secured your preapproval, and have your down payment funds ready to go. The time has finally come! You’ve found your dream home and you’re ready to make your first offer. In the words of Kevin McCallister from the movie Home Alone, “This is it, don’t get scared now!”
Here are some helpful pointers to keep in mind when putting an offer on your first home.
Confidence is key in your home search
When it comes to making an offer on a home, doing research and becoming a smart buyer will not only educate you, it will give you the confidence you need when negotiating a deal on your home. The more informed you are about the homebuying process and the state of the housing market, the more comfortable you'll feel throughout the entire process. There are countless resources available on the web, and a quality real estate agent or mortgage lending professional will gladly answer your questions. Once you've gathered everything you have learned, partner with an experienced real estate agent and trust your gut. If you're interested in learning more about the mortgage lending process, click here.
Thoroughly research the home before making a decision on your offer
Before you jump in with both feet, it’s best to first find out the story of the listing. Usually, home prices are at least somewhat negotiable, particularly when you're armed with valuable information about the listing, such as how long the house has been on the market, how motivated the sellers are, if any repairs are needed, and what comparable homes in the neighborhood are selling for. Your real estate agent should be able to provide you with comparable listings/sales and other vital information, then work with you to arrive at a realistic offer amount that will both catch the attention of the seller and save you as much money as possible.
Related reading: Homebuying Myths Revealed
After you make your offer, don't expect to move into your new home the following day. First, the seller must choose to accept your offer. The time it takes to close on a home or finalize the loan after an offer has been accepted can vary from lender to lender, so patience is key. Some of the things that you can expect during the closing process include:
An appraisal of the home
Employment verification for you and your co-borrower, if applicable
Filings with the title company
Paperwork, paperwork, paperwork!
Settlement statement and monthly payment review
The most important part of the mortgage process comes within days of when your contract is accepted by the seller. At this time, act swiftly and provide any and all documentation your mortgage loan officer requests in a timely manner. Often, processes may take weeks to complete and depend on you providing certain documents and signatures.
After the initial documentation request, there's very little required of you while all of this "behind the scenes" work is going on, but your mortgage loan officer should keep you up-to-date on what is happening with your loan and what, if any, action is needed from you.
A few things to keep in mind while your mortgage loan is in the closing process:
Retain documentation of large deposits into any of your accounts, as well as fund transfers between accounts
Keep your loan officer informed of any changes to your salary or compensation
Be very cautious about taking on additional debt or co-signing on a loan
In general, changes to your debt-to-income ratio could negatively impact your application process, so keeping your loan officer informed of any and all changes to your financial situation is important to ensure your home purchase and mortgage closing are smooth and timely. For additional tips, check out our first-time homebuyers ebook.