Home Buying - Quick Guide

Buying your first home is a significant milestone in life, and it's important to approach it with care and consideration. The process of buying a home can be overwhelming, especially if you're a first-time buyer. But with the right information and guidance, you can make informed decisions and find the perfect home for you.

Here are some tips to help you navigate the process of buying your first home:

1. Determine your budget

The first step to buying a home is determining your budget. This means figuring out how much you can afford to spend on a house without putting your financial stability at risk. Consider your current income, expenses, and any other financial obligations you have, such as student loans or car payments. You'll also need to factor in the cost of property taxes, home insurance, and maintenance.

A common question we’re asked is, how do I determine my budget?

Determining your budget for buying a home involves a few key steps:

1. Determine your income: Calculate your monthly income after taxes. This will give you an idea of how much money you have to work with each month.

2. Calculate your expenses: Make a list of all of your monthly expenses, including rent, utilities, transportation, groceries, and any other bills or payments you make each month.

3. Factor in future expenses: Consider any upcoming expenses that could impact your budget, such as a car payment or a tuition bill.

4. Use a mortgage calculator: A mortgage calculator can help you estimate how much you can afford to borrow based on your income, expenses, and other financial factors.

5. Determine your down payment: Decide how much you're able to put down as a down payment. A higher down payment can lower your monthly mortgage payments, but you'll need to have the funds available upfront.

6. Consider other costs: In addition to your down payment and mortgage, you'll also need to factor in closing costs, property taxes, and home insurance.

By considering all of these factors, you can get a clearer picture of how much you can afford to spend on a home. It's important to be realistic and conservative when determining your budget, as you don't want to stretch yourself too thin financially. When working with KRG, we work to guide you through this process when you’re ready.

2. Get pre-approved for a mortgage

Once you have a budget in mind, you'll want to get pre-approved for a mortgage. This involves meeting with a lender who will review your financial information and credit history to determine how much they're willing to lend you. Being pre-approved can give you an advantage in a competitive housing market and can also help you narrow down your search to homes that fit your budget.

We have many preferred lenders that have helped our clients through the years buy the homes of their dreams.

When getting pre-approved for a mortgage, there are several must-do steps to ensure you get the best possible terms and avoid any surprises down the road:

1. Review your credit report: Before applying for pre-approval, review your credit report for any errors or issues that could impact your ability to get approved or impact your interest rate. You can get a free credit report from each of the three credit bureaus (Equifax, Experian, and TransUnion) once a year at annualcreditreport.com.

2. Gather financial documents: Lenders will require documentation of your income, employment history, assets, and debts. Gather recent pay stubs, W-2s, tax returns, bank statements, and any other relevant financial documents.

3. Compare lenders: Don't just settle for the first lender you come across. Compare interest rates, fees, and terms from multiple lenders to find the best deal for you.

4. Be honest and accurate: Provide accurate information on your application and don't exaggerate your income or assets. Lenders will verify your information, and any discrepancies could result in denial or rescinding of pre-approval.

5. Understand the terms: Read and understand the terms of the pre-approval, including the interest rate, loan amount, and any conditions or contingencies. Ask questions and clarify any concerns with the lender.

6. Don't make big changes: Avoid making any major changes to your financial situation during the pre-approval process, such as quitting your job or opening new credit accounts. These changes can impact your pre-approval or the final loan approval.

By following these must-do steps, you can increase your chances of getting pre-approved for a mortgage with favorable terms and avoid any surprises or issues during the home buying process.

3. Choose the right location

Location is one of the most important factors to consider when buying a home. Think about what's important to you, such as proximity to work or schools, access to public transportation, or the availability of parks and other amenities. You'll also want to consider the local real estate market and the potential for future growth or development in the area.

4. Hire a real estate agent

Working with a real estate agent can be a valuable asset when buying your first home. An experienced agent can help you navigate the housing market, negotiate with sellers, and ensure that all the necessary paperwork is completed correctly. They can also help you find homes that fit your budget and meet your needs.

KRG has licensed salespersons and brokers available to help you throughout the process. We are licensed in CT, MA, and will soon expand to NH.

5. Do your due diligence

Before making an offer on a home, it's important to do your due diligence. This includes having the home inspected by a professional, reviewing any applicable zoning regulations or homeowners' association rules, and researching the local real estate market. It's also a good idea to talk to neighbors and get a sense of what it's like to live in the area.

At KRG we are here to guide you through this process.

6. Be prepared for closing costs

Closing costs are the fees and expenses associated with finalizing the purchase of a home. They typically include things like attorney fees, title insurance, and taxes. You'll want to be prepared for these costs, which can add up to several thousand dollars, and factor them into your budget.

Buying your first home can be an exciting and rewarding experience, but it's important to approach it with care and consideration. By following these tips and working with a trusted real estate agent, you can find the perfect home for you and your family.

The typical closing cost percentage over the years has been anywhere from 2.5-3.5% of the purchase price. When negotiating your offers, it is possible for seller’s to cover some and even all of these costs for buyers. Ask us about this at your buyer consultation!