The pride that comes with home ownership is well earned. When you find your perfect home in New Hampshire or Vermont, you will enjoy the fruits of your labor building equity, building credit, and building your life in the welcoming and evolving culture of the Upper Valley. Here is a checklist for first time homebuyers to keep you organized.
Budget Your Money and Get Pre-approved
1. Determine your budget: You will need to budget for the monthly mortgage payment, property taxes, and homeowners insurance. In some cases, you will also need to budget for homeowners association fees. Factor in higher utility costs and home maintenance costs in your budget as well.
2. Determine your down payment: The down payment for a mortgage is typically in the range of 3.5%-20% (though some loans are available for 0% down) of the lending amount. Lenders will often require mortgage insurance when paying less than 20% down. A down payment for a conventional mortgage on a $225,000 home will range from $7,875-$45,000.
3. Estimate your closing costs: The closing costs when buying a home are typically in the range of 3%-6%. The closing costs include appraisal fees, escrow fees, title insurance expenses as well as other items which vary from state to state. The closing costs for a $225,000 home will range from $6,750-$13,500.
4. Obtain mortgage pre-approval: When you feel confident in your means and have a good handle on your prospective budget it’s time to start shopping for a mortgage. You will want to obtain pre-approval from a lender. Take the time to shop around to find the best mortgage deal you qualify for. Mortgage lenders will consider your income, assets (available cash for a down payment and closing costs), DTI (debt to income ratio), and credit report. When you are approved you will receive a pre-approval letter from the lender.
Look for Your Perfect Home
5. Hire a real estate agent: The real estate professionals (both seller’s agents and buyer’s agents) will take you seriously when you have been pre-approved for a mortgage. Your next step is to hire a buyer’s agent (a seller’s agent represents the person selling the property and will not be working in your best interests). A buyer’s agent from LindeMac Real Estate will help you every step of the way. Your agent will show you homes that match your criteria, learn about your priorities, submit an offer letter on your behalf and negotiate on your behalf. They will guide you through the home buying process and answer all of your real estate questions clearly.
6. Determine your home criteria: Your buyer’s agent will gather all the criteria you provide and show you properties that meet your criteria. You will include home type (single-family home, condominium, townhouse, duplex) number of rooms, schools, neighborhood amenities, and anything else that might be important to you (a swimming pool, a big backyard, etc.) in your criteria list.
Make an Offer on Your Perfect Home
7. Make an offer: Your buyer’s agent will help determine an appropriate amount to offer on the home you found with respect to the time the home has been on the market, prices of similar homes in the area, competition for the home, and any necessary repairs that are needed. Your agent will also discuss contingencies to include (home inspection and an appraisal are typical) and how much earnest money to offer (good faith money held in escrow to cover professional costs if the deal doesn’t work out, typically 1%-2% of the home price).
Schedule a Home Inspection (to ensure it is close to perfect)
8. Home inspection: A home inspection is money well spent for a first time home buyer. The inspection will provide valuable insight into the condition of the home (both structural and major systems are addressed). The cost is nominal, usually in the $300-$500 range, for a 2-3 hour single family home inspection. With the results of the inspection, you can decide whether to move forward (if you had it listed as a contingency) and request issues to be corrected or negotiate a better price or simply decide to walk away and find something better.
9. Additional inspections: Your buyer’s agent from LindeMac Real Estate is knowledgeable of the area and neighborhoods of the Upper Valley. They may recommend additional inspections that would be to your advantage (and will suggest including them in your contingencies in the formal offer).
10. Appraisal: The appraisal determines the fair market value of a home. It is another important contingency and will allow you to walk away if the appraisal comes in lower than what you agreed to pay (most lenders will require an appraisal for closing on a loan).
11. Negotiations: Your buyer’s agent will negotiate on your behalf when necessary. Perhaps there is a major issue that was revealed during the home inspection process, or the appraisal came in much lower than what you offered (again, this is why contingencies are very important). Keep in mind that normal wear and tear on homes is expected, so you won’t be asking for repairs on scuffed baseboards, or asking to have old carpets replaced. When both buyer and seller agree on the price you will begin the closing process.
Closing (get your keys and enjoy your home)
12. The closing process takes 30-45 days and ends on closing day. Closing day usually takes 1-2 hours. You will sign all the final paperwork, make payments for closing costs, and get the keys to your perfect home. Congratulations and welcome to the neighborhood!
The team at LindeMac Real Estate looks forward to helping you find your perfect Upper Valley home in New Hampshire or Vermont. We look forward to welcoming you as our neighbor in this beautiful part of the country. Contact us today!