So you want to buy your first home? You’ve got a good job, you’ve saved up for a downpayment, and the house band the tenants upstairs started six months ago is progressively getting worse instead of better. Yes, it might be time to consider buying your first home. This is part one of a four part post that covers the general steps to buying your first home, and covers things like determining what you can afford, getting a loan, finding a house and handling inspections, and more. If you have questions not covered, email me or post in the comments below!
I’m biased, of course, but I think that the New River Valley is a pretty good place to consider buying your first home. Low tax rates, good median price points and a wide mix of products (i.e. houses) makes the NRV a pretty balanced place to get started. Buying a home isn’t for everyone, however – I know it’s sacrilege for a real estate agent to say that, but the truth is that if you’re not going to be in the home for at least three years then buying a home right now probably doesn’t make good financial sense. There are closing costs when you buy, closing costs when you sell, and owning a home costs money in between – so if you don’t see being in the NRV for at least three years, it might make sense to rent – but we can run through your situation, if you’d like.
The very first thing I’m going to recommend someone do before contacting an agent will be to get preapproved with a local lender (here’s a good one). I highlight both for a couple of reasons … first, a preapproval looks at not just your income and your expenses, but verifies them against your credit score sothat you know what a lender is willing to offer. Don’t be shocked by the number, though – just because they say you’re qualified for $350000 doesn’t mean you have to spend that much. And a local lender knows our market … out of town lenders are looking at numbers on a computer screen to determine whether or not they’ll lend money in a particular market. In an area like ours, where the patterns of Virginia Tech and Radford University dictate so much of the real estate traffic, having a lender who knows the trends can make things much easier when it comes time to fund the loan.
I’m Approved! Now What?
So the lender has given you a preapproval letter and said that, based on your credit report, you’re pre-approved for a loan of some amount. Notice they say that the final approval is subject to things like another credit report, W-2s, and more, but for now the pre-approval is good. From here, we know what you can get a loan for, what you’re comfortable actually paying for, and we can go shopping!
Well, first you need to find a real estate agent who’s full-time, who knows the Blacksburg/Christiansburg/Radford area, and who you’re comfortable working with … there, that’s out of the way. (yes, that was in fact a shameless, unapologetic plug)
Once your pre-approval is done and you’ve selected your real estate agent, it’s time to sit down and look at what’s on the market. The New River Valley real estate market is relatively small – we sell a little more than 2000 homes every year, but it’s still next to impossible to see every single home that’s on the market. In one Christiansburg neighborhood alone there are more than 60 homes for sale … only with a lot of time, the memory of an elephant and nothing else coming on the market could you see all of them! And in truth, searching for 3 bedroom, 2 bath homes in Blacksburg under $250000 is going to get you a lot of options, and so we need to spend some time really working through what the important items are for your home search. Are hardwood floors a must-have, or nice-to-have? Should we leave out oil heat, or add in Cape Cods? Want a place that has a fireman’s pole? (That’s not a searchable criteria, but it’d still be a cool feature!) Anyway, weeding through things and determining what criteria to use when searching for homes is an important next step, and will ultimately make choosing the right home much easier.
In order to buy your first home, you need to start laying a solid foundation. Get preapproved through a local lender, work with an agent who’s full-time and who knows their market, and spend some time working through the myriad of search options available to a home buyer. I promise, you’ll be on better footing for it in the end.