First-Time Home Buyer Checklist

As you begin the co-buying or home-buying process, there are many factors to consider. Throughout the process, you’ll hear legal jargon like contingency and escrow. You’ll meet and work with tons of people, from mortgage lenders to home inspectors to real estate agents. And there is seemingly a never-ending series of steps to navigate. It is no wonder many people start to feel overwhelmed as they try to understand the process of buying a home.

If you go through the co-buying journey, Nestment has a concierge service to help guide you through the process. But before taking the big leap, we’ve put together a checklist below to help you understand what to expect as you make your way from house hunter to homeowner.

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So, let’s get started.

1) Find a real estate agent

It is not required to use a REALTOR® or real estate agent when you buy a home, but they will make the process easier. An agent can help you find a property within your budget, advise you on how much to offer for a property, and help you submit an offer. You’ll want to find someone experienced, knowledgeable and trustworthy with whom you can establish a great rapport.

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2) Determine how much you can afford

You will only be offered the amount of money that you can afford to pay toward your monthly mortgage. Begin house hunting, you should understand how much you can spend on a home so you can narrow your home search.

The most important step is understanding your debt-to-income (DTI) ratio by adding up all of your recurring monthly expenses. These are things like rent, student loan payments and minimum credit card payments. Then divide your monthly debts by your total monthly pre-tax income. Most lenders like to see applicants with a DTI ratio of less than 50%.

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‍3) Find a mortgage lender and get pre-approved

Getting pre-approved means that a lender has reviewed your income, expenses and credit report and has conditionally agreed to loan you a set amount of money for a mortgage. This allows you to look for a home at or below that price level with confidence. This also gives sellers confidence that you’re able to pay, as you can show them the pre-approval letter.

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4) Search for a home

Now that you’re pre-approved, you can start searching for homes to co-buy within your budget. Start by researching and visiting neighborhoods and look at current and previous listings in those areas. Most properties are listed online. You can also use online real estate databases to help you find properties within your budget. Also, discuss with your real estate agent what the top features are that you’re looking for in a home, and they can make some suggestions for you. 

While you’re viewing homes, don’t be afraid to take them for a test drive, if you will. Test the plumbing and electric systems by running water and flip on the light switches. Also, take a close look at the gutters, chimney and trees noting their conditions. While a home inspector will do a more thorough inspection later (unless it is waived), you can save time and stress by spotting dealbreakers early.

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‍5) Gather your documentation

When buying a home, you will need to submit financial documentation to your mortgage lender, so start gathering it early. The required documents will include:

• Proof of identification (e.g., a government-issued ID, driver’s license, or passport)
• Your last 2 months of income (e.g., paystubs, bank statements, etc.)
• Proof of funds for the down payment and closing
• Your last two years of tax returns, bank statements or investment account statements

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6) Make a smart offer

Once you’ve found a home that checks all the boxes, now it’s time to put in an offer. Lean on your agent for the initial offer amount and contingencies, taking into consideration the current housing market, how long the home has been for sale, and any outstanding offers from other buyers that you might be competing against. Your real estate agent will be very helpful in this process, as they can compare sales data and other local property values to help you make a reasonable offer.

In your offer letter, you can also request repairs or make your offer contingent upon a successful inspection. You’ll also need to include an earnest money deposit, which is a small advance you make toward your down payment. This is usually equal to 1-3% of the purchase price of the home.

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7) Schedule a home inspection and home appraisal. 

For the home inspection, the inspector will closely examine the property and write a report detailing the condition, noting any issues. Use these findings to ask the seller to make fixes, reduce the purchase price, or make concessions for closing.

If you have a mortgage lender, they’ll arrange for a professional appraiser to determine the property value, ensuring that they (and you) aren’t paying more than the home is worth. The appraiser looks at factors like overall property values in the neighborhood and the general condition of the property.

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8) Close on the house

After your home passes inspection and undergoes an appraisal, it’s closing time. Closing means it is time to sign all of the necessary paperwork on your mortgage and take control of the property. Your mortgage lender will send you a document called a Closing Disclosure. This will include the final terms of your mortgage loan, what you owe in closing costs and your interest rate.

On closing day, you’ll need to provide identification (ID), proof of home insurance, checks or cashier’s checks to cover the closing costs, and other documentation that your agent will bring to your attention.

As soon as all the paperwork is signed, congratulations! You’re officially a homeowner.

Buying or co-buying a home can be a complicated process, but Nestment can make it easier. Start by following this checklist that breaks down the steps. Then, contact Nestment and work with an experienced concierge who can help you seamlessly navigate the co-buying process. Soon enough you’ll be popping a bottle of champagne in your brand-new home.

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Nestment, Inc. does not guarantee and is in no way responsible for the accuracy of information provided in this blog post. All information is provided “AS IS” and with all faults. Data presented here may not reflect all real estate activity in the market.  While the information on this site is about legal and tax issues, it is not intended as legal or tax advice or as a substitute for the particularized advice of your own attorney and tax professional.

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