You’re watching friends and family around you either buy new homes or enjoy the places that they’ve already purchased. Perhaps you’ve come to the realization that the only person building any wealth and equity from the rent you pay every month is your landlord. Or maybe it’s just time to join the club and find a space with a backyard for the dog.
Whatever your reason, when you’re a first-time homebuyer, the process can be a little overwhelming if you’re not prepared. Here are 10 easy steps you should follow as a first-time home buyer in New Orleans.
10 easy steps to buying your first home in New Orleans
1 Check your credit
It’s just a fact that your credit score drives whether or not you can be approved for a mortgage. It also affects the price you will pay for insurance each month. Know ahead of time if you need to do a little credit clean up. Once it’s done, you’ll be in a position to make an offer when you find the right place. Talking to a mortgage lender first in the process makes the rest of it much, much easier.
2 Save for your down payment
Unless you’re a veteran using a VA loan or purchasing in an area that allows for Rural Development 100% financing, you’re going to need a down payment. Assume that you’ll need to save 3.5% of the purchase price. Example: for a $200,000 house, you will need $7,000 in down payment money. There are several handy apps that can get you started saving money without making you want to cry.
3 Budget for inspections
We know…more money, right? But the money you spend on inspections is worth every penny. This is where you discover hidden defects in a house that were not obvious to you when you toured it with your real estate agent. This is also where you confirm there are no active termites because even if there’s a contract on the property, termites can’t read.
4 Find the right agent
We don’t have to point out that we have the best New Orleans real estate agents, do we?
Read: What’s a buyer agent?
5 Find the right neighborhood
Unless you’ve lived in New Orleans your entire life, you likely don’t know what neighborhoods are best suited to how you live. We can help you get started with our free neighborhood quiz that matches your budget and lifestyle to different areas of the city. You might be surprised at your options!
6 Find the right house
Now that you’ve narrowed down the neighborhoods that you love, it’s time to find a house that you adore just as much. We can help you through the process of negotiating the right price and terms that keep you within your budget.
7 Perform your due diligence
There’s more to due diligence than just having the house inspected. What’s the flood zone? Is insurance affordable? Do you need to verify the square footage, the zoning, or the rules and regulations for a condo or homeowners association? This is the time to do it. Your agent will be your guide to how quickly all of this needs to be completed based on your contract.
8 Get your loan approval
All of that work you’ve done so far is for nothing if you don’t get your mortgage approval. That means providing all of the documentation that your lender asks for in a timely manner. Sometimes that means providing them with information you are totally positive you’ve already given, but just go with the flow. The old saying “he who holds the money rules” definitely applies here. No documentation = no loan = no house.
You’re almost there! Your closing day can be stressful, but it doesn’t have to be. Take a deep breath. Let it out. Now make sure you have your ID in your pocket or purse because the title company will need to verify you are who you say you are. You’ll also need a cashier’s check for the amount of money you need to bring to close (down payment, closing costs, etc.) and the title company will tell you ahead of time what that number is.
When you arrive, you’ll need to flex your fingers, because there will be a stack of documents for you to sign. Once that’s all done, you’ll get your keys to your new home!
That’s it! You’re a homeowner! Time to break out the bubbly, do a little dance, or plan the housewarming party. Totally up to you, because it’s all yours.
Need to know more about buying your first home? Our Ultimate New Orleans Home Buyer Guide breaks it down even more.