Buying a house requires a lot of time and effort. The steps below will help you know what to expect and make the home buying process more manageable. Here’s how it works…
Purchasing a home is one of the biggest financial decisions you will make in your life so before you decide to buy, carefully consider the pros and cons of home ownership. Be sure to consider how much such a purchase will affect your finances and your lifestyle.
Before getting a mortgage or loan of any kind it is wise to check your credit. Give yourself time to dispute any errors and clean up any mistakes on your credit report. Try to reduce your monthly debt obligations and do not open any new lines of credit. Also begin to research loan programs. Doing your financial homework will give you a better idea of how much you can afford and what it will cost you to purchase a home.
Before you start looking for a home, you need to know how much you can actually afford. A mortgage lender will gather vital financial information from you to determine how much you can borrow. Finding the right lender is very important as this individual will help you identify your priorities and choose the mortgage program that is best for you. When seeking a mortgage lender ask lots of questions and make sure they have mortgage solutions that meet your unique needs.
Once you have the right lender, get a pre-approval to let you know exactly how much you can borrow. Having an actual approval – not a pre-qualification (yes, there’s a difference) – before you start home shopping guarantees your financing, equips you to make an appealing offer, and helps the sale go much faster.
Buying a home is not as easy as it looks so a trusted real estate agent becomes a vital partner. The professional assistance of a real estate agent gives you to access to information not readily available to the public and their knowledge of the home buying process, negotiating skills, and familiarity with the community you want to live in can be incredibly valuable. Best of all, it cost you nothing to use an agent – they’re compensated from the commission paid by the seller of the house.
Make a list of the things you need your house to have such as the number of bedrooms and bathrooms. Don’t forget to consider the neighborhood, the school district, and your commute to and from work. Take into account how safe the community is, the convenience of shopping, and the rate of home appreciation. Take as much time as you need, allow your real estate agent to help you navigate the market and when you find the home that’s right for you…
An experienced real estate agent will evaluate how much comparable homes sold for and help you negotiate a fair offer. But once you’ve made your offer, don’t think it’s final. The seller may make a counter-offer to which you can also counter-offer. Once you and the seller have reached an agreement, the house will go into escrow and you’ll proceed through the remaining steps of the home buying process.
Work with your mortgaged lender to select the appropriate loan and get a final approval to purchase your home by the date specified for closing.
Many of the steps to follow safeguard your interest as the home buyer and are required by your mortgage lender for final mortgage approval otherwise known as underwriting. Details and due dates become extraordinarily important now so focus and trust the guidance of your mortgage lender and real estate agent.
Home Inspection: Hire a reputable home inspector to assess the condition of the property. This assessment may include testing electrical equipment, plumbing systems, and appliances as well as evaluating the integrity of the home’s roof, exterior structure, and foundation. No home is perfect so be reasonable and know that it is very likely the inspector will find faults. However, be assured that you can still renegotiate or even withdraw your offer. Should you decide to proceed with the purchase and especially if you have negotiated repairs, perform a final walk-through or review of the property just before closing to confirm that the home is in the condition you agreed upon to purchase.
Appraisal: After a satisfactory home inspection, your mortgage lender will require an appraisal of the home. An appraisal provides an independent, unbiased estimate of the true value of the property and lets all parties involved know that you are paying a fair price.
Home Insurance: Your mortgage lender will also request documentation regarding your home insurance. The home owners insurance premium is a part of the mortgage payment (unless you elect to pay it separately) so your mortgage lender will request a binder from your home owners insurance provider.
Other details: Be sure to satisfy any other outstanding conditions that may affect the final approval of your mortgage loan. These may include documenting the source of a large deposit, providing updated pay stubs, or writing a letter explaining employment history.
After all conditions have been met you are “clear to close”.
Closing on a home means the sale is complete and all the terms and conditions of the purchase agreement have been met. A closing attorney will guide you through signing a ton of paperwork and the deed will transfer from the seller to you.
Congratulations, you are officially a homeowner!