At Ray and Poynor we work with clients across the board in the Birmingham area, from first-time home buyers to empty-nesters looking to downsize. If you’re looking for your first home, congratulations! It’s an exciting time. Here are a few tips to help you in your search:
1. Write down a list of must-haves.
Have you thought about where you’d like to live? The Birmingham area has many great communities to choose from. Once you nail down your preferred location, figure out your must-have features. Is a backyard non-negotiable? Do you require a certain number of bedrooms? Do you need to be close to downtown? Create a list and share it with your realtor to narrow your search. Other items like a fully remodeled kitchen may be nice to have, but it’s best to keep an open mind.
2. Calculate a realistic budget.
You already know you’ll need to make a down payment, but how much mortgage can you realistically afford each month? A general rule of thumb is to spend no more than 30 percent of your take-home income on housing. You don’t want to start looking at homes that will leave no room for life’s other expenses! Be honest with yourself about what a comfortable budget looks like.
3. Secure a pre-approval letter.
Now that you know what you can afford, it’s time to go to a lender and obtain a mortgage pre-approval letter. During this process, a lender will evaluate your financial history—including your credit score—and provide you with a letter stating the loan amount they will offer. Once you have this letter, you can take it with you on your home search and submit it along with your offer to show you’re prepared to buy!
4. Obtain multiple mortgage quotes.
You may have a pre-approval letter from a certain lender, but when it’s time to secure your mortgage it helps to shop around. Getting a few different quotes will ensure you get the best rate. Interview several lenders and provide them with your information within the same time period to see what they can offer. The good news is that interest rates are historically low right now.
5. Don't forget closing costs.
Picture this scenario: you’ve obtained your pre-approval letter, conducted your home search, submitted an offer (with the help of your realtor!), and your offer has been accepted—you’re almost to the finish line! Just remember that there will be fees to pay at closing—about two to five percent of the value of the home. These include (but are not limited to):
- Attorney fees
- Home inspection
- Escrow or closing fees
- Homeowner’s insurance
- State, county or city transfer taxes
It’s better to prepare for these costs on the front-end so there are no surprises on closing day. (Your realtor will be able to provide you with an estimate of these costs as well).
Now that you know some of the main considerations of home-buying, it’s time to find realtor you trust to help you! Contact one of our realtors today—we’ll guide you home.