First Time Home Buying

Congratulations on your decision to become a homeowner! And, that old saying is true: It’s more affordable to own than pay rent. Because you are going to be a new homeowner, the team at Sold by Eric sticks with you every step of the way. We help you determine everything from how much home you can afford to the offer process to the closing process, and incentives to all our new homeowners.

01

GETTING STARTED

What’s your price range? Let’s find out.

Although all lenders are different, many go by the 28 percent rule. That means your mortgage payment (including principle, interest, taxes and HOA fees) should be 28 percent of your monthly gross income. Calculate how much you can afford this way:
Household Income: $80,000 (before taxes)
Times 28% equals $22,400
Divided by 12 months $1,866 – This would be your estimated monthly payment.

Learn more

02

BALANCING BUDGET AND HOME SIZE

Now it’s time to start a realistic home budget. Gather all your monthly expenses including auto loans, insurance, taxes, credit cards, grocery budget, entertainment, child expenses, and any other monthly debt you have.

Learn the trade offs

03

PROCESS DETAILS

With every major purchase, such as a home, there are always the extras. These include:

  • Contingencies – These come in the purchase offer. Your offer can be “contingent” upon certain items. Things like, the fence will be repaired or other repairs will be made. Or, the offer is contingent upon all appliances staying with the home. We can also help you make decisions on which items should be contingencies.
  • Home Warranties – Obtaining a home warranty is a no-brainer, even for DIY folks. We have a plethora of home warranty providers with varying options to help you make an informed decision on per visit deductible and what is covered.
  • Insurance – All homeowners need insurance for the home to protect you and the lender from liability. Ask us about our connections with local agents; we’ll point you in the right direction!

04

THE CLOSING PROCESS

Signing the final papers to buy the home is usually held at a title company. When you first arrive, youragent will be on hand to answer any questions you have. While the paper pile may seem like a never-ending stack, each document has its own purpose. Our relationships with local title companies ensure you understand everything you are signing.

05

MYTHS & TRUTHS

Buying a home is a major purchase. You may hear stories from friends and families that may be true or just a myth. For example, “As the buyer, you must pay for all the closing fees.” Or, “Buyer’s pay all of the agent commission.” This is not true. We help you navigate through the myths and truths.

More Myths and Truths

ARE YOU READY TO BECOME A FIRST TIME HOMEBUYER?

FIND YOUR HOME TODAY

So, what can you afford? What’s your price range? It’s easy to calculate.

Although all lenders are different, many go by the 28 percent rule. That means your mortgage payment (including principle, interest, taxes and HOA fees) should be 28 percent of your monthly gross income. Some mortgage lenders will lend more, where others will lend less, but 28 percent is a good place to start. Calculate how much you can afford this way:

Household Income: $80,000 (before taxes)

Times 28% equals $22,400

Divided by 12 months $1,866 – This would be your estimated monthly payment.

To determine your price range, that’s also a pretty simple calculation:

A good rule of thumb is for every $100,000 borrowed, you will pay $650 per month. In the scenario above we want you to buy a home priced right—one that will meet your $1,866 monthly mortgage payment. To calculate what home price you can afford:

($1866 / $650) x $100,000 = $290,000

Now that you know how to determine how to determine a monthly payment and what price of home you can afford there are some other items to consider.

The down payment! Most lenders offer 30-year conventional mortgages at varying rates and ask for up to 20 percent down. However, an FHA loan requires only 3.5 percent.

Balancing Budget and Home Size

Now it’s time to start a realistic home budget. Gather all your monthly expenses including auto loans, insurance, taxes, credit cards, grocery budget, entertainment, child expenses, and any other monthly debt you have.

Based on the scenario above, you want to make sure you have enough to meet your monthly mortgage obligation. If you have high debt, you may want to consider paying some of it down before you apply for a home loan.

As far as home size, for first time homebuyers, you also need to be realistic about how much room you need. If you are married with no children, you don’t need a four bedroom home. Even if you have one or two children, you don’t need a four bedroom home. We can help you determine what the best size home is for your family but for new homeowners, a good rule of thumb is to stick to 2 bedroom, 2 bath and ½ bath homes. This is where the agents on our team come in handy. We are with you every step of the way including pointing out how much home you need.

It’s a good idea to look at all types of homes, even those that may need some repairs. While many first time homeowners want a new home, sometimes you must make some trade-offs to keep your mortgage payment affordable.

Make a list of must-have rooms. For example do you need a home office? Is a good sized laundry room a must-do? Don’t think about what your friends are buying; think about what you’ll be buying to meet your family’s needs.

Myths and Truths

Buying a home is a major purchase. You may hear stories from friends and families that may be true or just a myth. For example, “As the buyer, you must pay for all the closing fees.” Or, “Buyer’s pay all of the agent commission.” This is not true. We help you navigate through the myths and truths.

Our goal is to be your forever real estate agency. This is your first home buying experience but it’s not going to be your only home purchase. Our commitment to you is to be the best Realtor that meets every need you have. We are trustworthy and we listen to your needs. We don’t make decisions for you, we work with you. We offer advice and make sure you are happy throughout your process through communication and where you are in the buying stage. We are a phone call, email or text away.

See why the team at Sold by Eric offers the experience you want when you purchase your first home. From the finding out how much you can afford, to choosing lenders to handing you the keys!