You have been renting your place for a while. Your income has gone up and your rent has remained stable. As a result, you have put away some money and are considering buying your first Northern Virginia home. What is next?
Evaluate your Cash-on-hand. You many have been saving, but you don't want to spend your entire savings when you buy your first house. Determine how much cash you have, and how much you want to keep in reserve for emergencies. What is left over is the amount you can contribute toward your purchase. This will need to cover your down payment and closing costs (mortgage application, any points to buy down your interest rate, costs of settlement, pre-paid escrows such as homeowners insurance and taxes). Remember to have some reserves for emergencies and for those items that you might not think about when you buy a new house!
Review your credit report. Keeping your credit report accurate is your personal responsibility. Everyone is entitled to a copy of their credit report, annually. Review the report and take action to correct any misinformation. This can be a time consuming task, so do this early in the process.
Speak to a Lender. Knowing what amount of cash you can put toward your purchase is critical to understand before you begin looking. Speak with a lender--or several-- to find out what kind of loans are available and how much you can qualify to purchase. Once you understand your options, be realistic about how much you WANT to afford. Just because you can afford to spend a certain amount on a property doesn't mean that you have to spend that amount. Think about your comfort level and establish the amount that you want to spend.
Find a Buyer's Agent. Ask friends and family for recommendations and then do your own research. Make sure you have an understanding of how a Buyer's Agent will be paid (usually by the seller at closing), and what you can expect from them on your behalf. Be sure you have confidence in them, because this will be a relationship that requires trust. Especially as a First Time Buyer, you would be well advised to have your own representation. If you share an agent with the seller (disclosed Dual Agency), they cannot legally advise you. As an inexperienced buyer, not receiving critical advice can cost you real money.
Buying your first home can feel a little like taking a step off the edge of a cliff and not knowing when you will reach the bottom. By taking these steps, you will begin the process of becoming and informed Buyer. As an informed Buyer, you will likely still be nervous, but you will feel like you have more control and a better understanding of the outcome.
If you want advice on Buying Your First Home, or other real estate related subjects, call me. As an Accredited Buyers Representative, I have assisted many buyers with the purchase of their new homes. I would love to assist you in buying or selling a home this spring!