First Time Home Buyer in Plymouth, Minnesota

First Time Home Buyer in Plymouth, Minnesota

First-time home buyers usually start out with a vision of their perfect home. They may already have chosen the style, the size, and even the color of that ideal place. However, the journey from launching that dream to making it come true can be a daunting one. With some planning and foresight, novices can navigate the course with less hassle and more enjoyment.

Currently a seller’s market, homes for sale in Plymouth are being sold at approximately their asking price. Combine that with rising annual interest rates and declining home equity, and it can create a confusing path to home ownership, especially for first-time buyers. One way to cut through the confusion is to find a qualified realtor. BJ Lavelle has the experience and expertise to take you from your dream into your dream home.

Save up for a down payment

Most first-time home buyers will not have a large down payment readily available. It may take time to save enough for 5%-20% of the purchase price. Even with the median down payment currently at 12%, the amount needed can be intimidating. With the median selling price of a home in Plymouth, Minnesota, at $522,400, this could require a $62,688 down payment. This is where a qualified real estate agent can help you maneuver successfully toward a solution.

While it may seem financially practical at the time of buying your home to pay a lower down payment, paying a higher down payment has some advantages. If your down payment is less than 20% of the selling price, you are typically required to have mortgage insurance to protect the lender in case of failure to make payments. Less than 20% may also raise the interest rate.

Mortgage insurance can include a one-time fee as well as monthly fees. These can add up until you reach 20% equity in your home, at which point you may be able to have the mortgage insurance canceled. Making a larger down payment can also help you get lower interest rates on your mortgage. With a lower interest rate, your monthly payments will help lower the principal faster. Saving for that down payment now can save you in the long run.

Figure out how much home you can afford

Dreaming about your perfect home is one thing, but finding out you can’t afford it in the final stages can be devastating. That’s why it is so important to know what your realistic buying range is. One easy way to find out what is practical for you is to use a mortgage calculator.

Once you know your price range, you can move on to shopping around for your home. Plymouth, Minnesota, has homes ranging in price from over $3,000,000 to as low as under $200,000. Depending on your own range, you may have to get creative and flexible when finding a home that suits your needs.

Trying to shop around on your own can be time-consuming and difficult. Finding a trusted real estate agent who knows the Plymouth market can save you time and frustration. BJ Lavelle is familiar with the housing market in Plymouth and can help you find a home that fits your budget and suits your aspirations.

Get pre-approved for a loan

Getting pre-approved for a loan gives you a head-start on the rest of the home-buying process. This step ensures that the lending institution will be ready to move more quickly when you decide to make an offer on that dream house. Having a mortgage preapproval letter gives you more negotiating power when it comes to competing with other buyers’ offers.

Before settling on one lender, however, it might be a good idea to shop around. Every source, from banks and credit unions to other financial institutions, has a different interest rate. Even a slightly lower interest rate will save you money over time.

Once you have found the right lender, they will ask you for specific information to find out if you are pre-approved. One of the most significant pieces of information will be your credit score. Generally, a score of 620 or higher is sufficient for obtaining pre-approval. If your credit score is lower than this, you will need to improve your score. One way to do this is by paying off credit card debts.

Make your offer

If you haven’t already found the house you love, now is the time to do it. BJ Lavelle can connect you with just the right house in Plymouth. With your letter of pre-approval in hand and a trusted and qualified agent working with you, the next steps can be exciting.

When you find the one that you love, it is time to make an offer. The buyer’s market is competitive right now, so having a realtor’s help in writing a competitive offer is essential. Know how much earnest money, or a good faith deposit, you can realistically afford. You will want to make sure that the offer is not so low that it offends the buyer but that it is realistic for you as well.

Usually, there will be some negotiating with counteroffers on both sides. The seller may have some contingencies proposed to protect themselves in the deal, but you probably want some contingencies yourself. For instance, you will most likely want an inspection, and your lender will need an appraisal done before making your final offer. Once all the bargaining is done and the contingencies have been met, your real estate agent can write up your letter of offer.

Closing time in Plymouth

Getting to this step is an occasion to celebrate. However, it will take about 30 to 45 days to get through the closing process. There are closing documents, such as the seller’s disclosure letter and your closing disclosure, and a final walkthrough that need to be taken care of before meeting at the closing table. Once these final steps are through, it is time to take the keys to your new home and move in.

To move smoothly through all the steps in buying your first home, find a realtor who is experienced. Having someone familiar with each part of the home-buying process gives you the luxury of enjoying this milestone in your life. Buying a home is the American dream, and Roost Real Estate can help you to make that dream come true.

*Header photo courtesy of Shutterstock

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