Being a homeowner is everyone’s dreams and ambition. Indeed, home ownership is a big commitment. However, the process of purchasing a home can be such a daunting and overwhelming experience for any individual. If you are planning to purchase a house, you need to know what you are getting into. Here are 10 essential steps to consider, when you feel ready to buy a home:
Where Do You Want to Live?
Decide where you want to live before buying a home. When deciding on the location of your new home, consider your future career aspirations about the local job market. Buy a house within a city that you intend to stay in for a very long time and that which meets your career goals.
Other things to consider may include the cost of living within that area, its demographics and accessibility to public means of transport. Choosing the right location will help you avoid the enormous costs that come along with moving to a new place.
Determining the best time to buy a home is also an important consideration which you can find information on here.
What’s Your Budget?
Once you have decided on the location that best suits you, the next step is conducting thorough research on the type of home that will fit your budget; this provides you with an overall idea of the types of properties that are currently available in the market and their pricing.
You will also want to go through some different mortgage calculators that will help you in determining the max purchase price you can afford on your home. These will take into consideration your monthly income and all expenses that you currently have.
This part is very important because you don’t want to be ‘living for you house’ as they say. If all of your extra income every month is going toward you mortgage payment you won’t be able to enjoy doing other things in life.
Boost Your Credit Score
For you to qualify for a mortgage, your credit score forms an essential aspect in the evaluation processes. Higher credit scores increase your chances of getting the best interest rates. However, if you credit score is to low you may not even qualify to get a loan. It is therefore critical to check your credit report early in advance and address any issue that may come up with the relevant authorities.
Start Saving for A Down Payment.
You are not just required to build a good credit score but also to make savings such that you are in a position to make a down payment of about 5% (could be lower) of the property that you intend to purchase. The only way around a down payment will be if you get a VA loan in which they will use a funding fee that is added to the loan instead of a down payment.
This 5% does not include other fees that may come up that you must pay (e.g. Closing Costs). It is important to have this amount of money saved before trying to purchase a home because the lender will not let you pay for this with a credit card and you must already have the money in your account for a few months prior.
Get Yourself the Right Real Estate Agent
It’s now time to cement the deal! Get yourself a real estate agent that you trust and who you’ll be comfortable working with. This does not, however, prevent you from deciding and making a purchase on your own.
The advantage of working with a real estate agent relies on their extensive knowledge of the industry. They will fully represent you and ensure you get the best out of the deal in terms of costs incurred. The best agents can be referred to you by family and friends who have had a positive experience working with them. You can also get in contact with a buyer representative who is accredited within your locality.
Get A Lender with The Best Rates
The real estate agent you have agreed to work with may come in handy when it comes to choosing the best lender to settle on. He or she may make suggestions on some of them who he has worked with in the past well, but the sole decision will still rely on you. You are required to go around gathering information on loans terms of the various lenders at your disposal. Some of the things to put into consideration at this stage may include interest rates, fees paid directly to lenders and any additional cost.
Get Mortgage Pre-Approval
When presenting your intent to buy a home, sellers require a ‘Proof of Funds’ letter that proves you are eligible for a home loan. For lenders to approve your loan request, they have to review your financial documents as well as do a credit check. If you get an approval, they offer you an official document that indicated the amount that you have been allocated.
This process is quick and can be done in a few minutes over the phone with your lender or mortgage broker.
Check for Houses Over the Internet or In Person
When looking for a property to buy, you need to conduct proper research over the internet on websites that deal with real estate. Your focus should not solely be on the property that you desire but also in things happening within that locality such as the community, availability of schools, public transport, and shopping centers. After that, you should make a visit in person to the property and conduct a physical examination.
Make an Offer on The Desired Property
The moment you find a property that entirely suits your needs and wants, you are required, with the help of your agent to come up with an offer letter. This reflects the price at which you would like to buy the property and any other term you would want to be part of the deal. You are then required to present the offer to the seller (agent will do this part) and enter into a series of negotiations. At the end when you both agree on all the terms and conditions, a purchase contract is drafted and signed.
Closing on a Home
Before moving to your newly acquired home, you have to ensure that you have in your possession all the necessary documents such as reports on inspection, homeowner proof of insurance and lastly the purchase contract. The lender will provide you with a cashier’s check that will be used in the coverage of your closing costs.
Important documents such as the title deed of the home and mortgage agreement are also required to be signed at this stage. Feel free to get clarification on anything not clear to you from any of the agents present. The property is now officially yours.
If you are a first time home buyer then you may find some other great information on this article.