BUYING YOUR FIRST HOME
Know Where to Start
Buying a home for the first time may seem like an overwhelming process, especially when you're not sure where to start. The Perren Property Group will be your partner in navigating this step of your real estate journey. Learn more about the process of obtaining a mortgage, finding the perfect home, and making an offer, and you'll be on your way to owning your very own home in Atlanta!
Understanding Your Mortgage
The first step in home buying is understanding your Mortgage. Most buyers need one, and there are a number of options that vary greatly from lender to lender and from buyer to buyer. It is important to understand your mortgage needs and speak with several different lenders to ensure you're getting the best deal and rate possible.
Types of Mortgages
There are four basic types of mortgages used by the majority of home buyers.
This is the standard loan used by buyers with good to excellent credit who make down payments of at least 10%. However, there are programs that offer options for lower down payments based on buyer credit and location.
These loans often apply to buyers with lower credit scores, as they offer a down payment as low as 3.5% and lower interest rates. However, FHA mortgages do also require mortgage insurance premiums, which can result in higher overall costs.
All veterans and active military members qualify for VA loans. These offer up to 100% financing, simplified loan approvals, and lower interest rates. They can be much lower than conventional loans.
What Do Mortgages Include?
There are four main components to a mortgage payment, often abbreviated as "PITI."
This is the repayment of the initial amount you borrowed from your lender (in other words, the price of your home).
This is a payment to the lender for the money borrowed (and is then added on to the initial price of your home).
Your annual city and county taxes assessed on your property are divided by the number of mortgage payments you make in a year and added into your mortgage.
Your monthly homeowner's insurance payment covers you against various hazards and is added to your mortgage payment.
Loan Shopping and Understanding Your Options
Before you decide on any particular loan or lender, it's important to do your research. That means meeting with AT LEAST two different lenders to ensure that you're getting the best rate possible. It's also important to understand two different types of interest rates offered by mortgage lenders.
Fixed-Rate Mortgage:
The interest on an FRM will not change, so your monthly payments won't change, making them very predictable.
Adjustable-Rate Mortgage:
The interest rate on an ARM will often be lower initially, but as interest rates do fluctuate with the market, they can be somewhat unpredictable or even result in higher payments.
Calculating Your Monthly Budget
Now that you understand what loan options are available to you, what you can expect to pay as a down payment, and what your likely interest rates will be, it's time to determine how much you can afford to pay every month, which will then be used to calculate the price range of your home.
Keep in mind that your mortgage costs will be based both on the price of the home and the CURRENT interest rates. A home's affordability can vary from one day to the next based on the current rates.
Finding a Real Estate Agent in Atlanta
It's extremely recommended to hire an experienced real estate team. Your agent (and their team) should be someone you trust, is an expert in real estate in your area and neighborhood, and is very proficient in working with buyers of your experience.
Shopping Homes for Sale in Atlanta
You and your agent will start searching for homes on the market that match your wants and needs in a home - from the type and style of house/townhome you prefer to the location and neighborhood to all the interior and exterior amenities you need or would love to have in your next home. Make sure you keep detailed records of the homes you visit, noting things you liked, didn't like, pros and cons, etc. Taking pictures can also help keep your memory fresh.
Tip: Before you start touring homes, ask your agent to determine the actual selling price of homes in your preferred neighborhoods - not just their listing price - to get a better idea of the actual affordability of the location.
Making an Offer
You found the perfect house, and now it's time for your and your agent to discuss and present your offer. It's important to work together to determine a price you can comfortably afford, but will also be a realistic offer for the seller to accept. Your agent will also advise you on other elements outside of price point that are attractive to sellers (due diligence period, financing contingencies, closing date, etc.). You do not want your offer to be dismissed against any competing offers the seller might receive.
What Will I Pay Upfront?
Earnest Money:
Think of this as your security deposit. It's paid when you submit your offer to show the seller that you are serious. When your offer is accepted, it is applied to your down payment or closing costs.
Down Payment:
This is determined by your loan, or possibly any government programs or assistance you have requested.
Closing Costs:
These are typically low for buyers and represent the fees associated with paperwork and lender charges.
Requesting a Home Inspection
If the seller accepts your offer, it's time for a home inspection. Before you close, your agent will suggest (and schedule) an experienced inspection team to walk the home and identify any potential problems or maintenance issues that might not be visible at first glance. If major issues of concern are found, discuss with your agent requesting that the seller repair certain issues in an amendment to your current contract.
Closing
The final step to owning your home. Time to sign the paperwork, make final negotiations and payments, and get your keys!
Review Your Contract
Before you sign any paperwork, it's important that you carefully read over the contract with your agent or lawyer to ensure there are contingencies - that is, if something falls through with your mortgage, you aren't still obligated to buy the home.
Finalize Your Mortgage
Still Have Questions?
Buying your first home can be a complicated process, and there is much to ask and learn. Do not hesitate to contact us today and ask any questions you many have on buying a home in the current ATL market. Also, continue to check out the resources available on our site.