Buying your first home is an exciting and rewarding experience, but it can also be challenging and stressful. There are many steps involved in the home-buying process, and you need to be prepared and informed to make the best decisions for your future.
New Hampshire is a great place to buy your first home, with its scenic landscapes, diverse communities, and affordable housing market. However, you also need to be aware of the specific laws, regulations, and programs that apply to home buyers in the Granite State.
To help you navigate the home-buying process in New Hampshire, we have compiled a checklist of the most important steps you need to take before you sign the contract and get the keys to your new home.
Step 1: Decide if You Are Ready to Buy a Home
Buying a home is a major financial commitment that requires careful planning and budgeting. Before you start looking for homes, you need to ask yourself some questions:
- How much can I afford? You need to determine how much you can comfortably spend on a monthly mortgage payment, as well as other expenses such as property taxes, insurance, maintenance, and utilities. A general rule of thumb is that your housing costs should not exceed 28% of your gross income. You can use online calculators or consult with a mortgage lender to estimate how much you can borrow based on your income, debt, credit score, and down payment.
- What is my credit score? Your credit score is a number that reflects your credit history and your ability to repay loans. It affects the type and rate of mortgage loans you can qualify for. The higher your credit score, the better your chances of getting approved for a low-interest loan. You can check your credit score for free once a year from each of the three major credit bureaus: Equifax, Experian, and TransUnion. You should also review your credit report for any errors or discrepancies that could lower your score or hurt your chances of getting a loan.
- How many liquid assets do I have? Liquid assets are cash or assets that can be easily converted into cash, such as bank accounts, stocks, bonds, or mutual funds. You will need liquid assets to pay for the down payment and closing costs on your home purchase. The down payment is the amount of money you pay upfront for the home, usually between 3% and 20% of the purchase price. The closing costs are the fees and charges associated with finalizing the transaction, such as appraisal, inspection, title search, recording, attorney, and lender fees. The closing costs typically range from 2% to 5% of the loan amount.
Step 2: Get Preapproved for a Mortgage Loan
A mortgage loan is a loan that you use to buy a home and repay over time with interest. Getting pre-approved for a mortgage loan means that a lender has reviewed your financial situation and agreed to lend you a certain amount of money at a certain interest rate. Getting preapproved has several benefits:
- It shows sellers that you are serious and qualified to buy your home.
- It gives you an idea of how much you can afford and what your monthly payments will be.
- It helps you narrow down your home search to homes within your price range.
- It gives you an edge over other buyers who may not have preapproval.
To get pre-approved for a mortgage loan, you will need to provide the lender with some information and documents, such as:
- Proof of income (pay stubs, W-2 forms, tax returns)
- Proof of assets (bank statements, investment statements)
- Proof of identity (driver’s license, passport)
- Credit report and score
- Debt information (credit card balances, student loans, car loans)
The lender will then verify your information and issue you a preapproval letter that states how much they are willing to lend you and under what terms. You should shop around for different lenders and compare their offers before choosing one.
Step 3: Find a Reputable Real Estate Agent
A real estate agent is a professional who helps you find and buy a home. A good real estate agent can make the home-buying process easier and smoother by:
- Helping you find homes that match your criteria and budget
- Scheduling showings and tours of homes
- Negotiating with sellers and their agents on price and terms
- Preparing and submitting offers and counteroffers
- Handling paperwork and contracts
- Coordinating inspections, appraisals, repairs, and contingencies
- Representing your interests throughout the transaction
When choosing a real estate agent, you should look for someone who:
- Has experience and knowledge of the local market
- Has good communication and negotiation skills
- Has positive reviews and references from past clients
- Has a compatible personality and style with yours
- Works for a reputable brokerage or agency
You can find a real estate agent by asking for referrals from friends, family, or coworkers, or by using online platforms that match you with agents based on your preferences and goals. You should interview several agents before hiring one and sign a buyer’s agency agreement that outlines their duties and fees.
Step 4: Search for Homes and Make an Offer
Searching for homes is the fun part of the home-buying process. You get to explore different neighborhoods, styles, and features of homes and discover what you really want in a home. You should make a list of your must-haves and nice-to-haves and prioritize them according to your needs and preferences. You can use online tools or apps to browse homes for sale in your desired areas and price ranges or ask your agent to send you listings that match your criteria.
Once you find a home that you like and can afford, you should make an offer to the seller. An offer is a formal proposal that states how much you are willing to pay for the home and under what conditions. Your offer should include:
- The offer price
- The amount of earnest money deposit (a refundable deposit that shows your good faith and commitment to the deal)
- The type and amount of financing
- The closing date
- The contingencies (conditions that must be met before the deal is final, such as inspection, appraisal, financing, title, etc.)
- The items that are included or excluded from the sale (such as appliances, fixtures, furniture, etc.)
Your agent will help you prepare and submit your offer to the seller’s agent and negotiate on your behalf. The seller can accept your offer, reject it, or make a counteroffer with different terms. You can accept their counteroffer, make another counteroffer, or walk away from the deal. This process can go back and forth until both parties agree on the final terms or one party decides to end the negotiation.
Step 5: Complete the Home Inspection and Appraisal
Once you have a signed purchase agreement with the seller, you need to complete two important steps before closing: the home inspection and the appraisal.
The home inspection is a visual examination of the physical condition and systems of the home by a licensed professional. The inspector will check for any defects, damages, or safety issues that may affect the value or livability of the home. The inspector will provide you with a detailed report of their findings and recommendations for repairs or improvements.
The home inspection is usually optional but highly recommended for buyers. It can help you identify any potential problems with the home and request repairs or credits from the seller before closing. It can also give you an opportunity to back out of the deal if the inspection reveals major issues that are unacceptable to you.
The appraisal is an evaluation of the market value of the home by a certified appraiser. The appraiser will compare the home to similar homes that have recently sold in the area and adjust for any differences in size, condition, features, and location. The appraiser will provide you with an appraisal report that states their opinion of the home’s value.
The appraisal is usually required by your lender to ensure that they are not lending you more money than the home is worth. If the appraisal comes in lower than your offer price, you may have to renegotiate with the seller, bring more cash to closing, or cancel the deal.
Step 6: Finalize Your Mortgage Loan
After completing the inspection and appraisal, you need to finalize your mortgage loan with your lender. This involves providing any additional information or documents that they may request, such as updated income or asset statements, proof of homeowners insurance, or title insurance. Your lender will also verify your employment status and credit score before issuing you final approval.
Before closing, your lender will provide you with a closing disclosure that summarizes all the costs and fees associated with your loan. You should review this document carefully and compare it to the loan estimate that you received when you applied for the loan. If you have any questions or concerns about your loan terms or closing costs, you should contact your lender immediately.
Step 7: Close on Your Home
Closing is the final step of the home-buying process where you sign all the necessary paperwork and pay all the required fees to complete the transaction. Closing usually takes place at a title company or an attorney’s office where both parties meet with their agents and representatives from the lender and title company.
At closing, you will need to:
- Bring a valid photo ID
- Bring a cashier’s check or wire transfer for your down payment and closing costs
- Review and sign all the loan documents
- Review and sign all the title documents
- Receive the keys to your new home
Congratulations! You are now officially a homeowner in New Hampshire!
Step 8: Move into Your New Home
Now that you have closed on your home, it’s time to move in and enjoy it! Moving can