Buying a house can seem like an overwhelming task regardless whether you’re a first-time home buyer or not. Knowing a little bit about what to expect before you begin your home search can relieve anxiety and stress about what’s to come. Start out on the right foot by checking out these six steps to buying a home.
Step 1 – Check Credit
In the months leading up to purchasing a home, you want your credit report to be in the best possible shape. You should order a copy of your report and look it over for any errors. Checking your report will also show you what delinquent accounts need to be taken care of immediately. Having a squeaky-clean report will ensure that potential lenders see you as a good loan candidate. Take advantage of your one free credit report copy per year thanks to the Fair Credit Reporting Act and get a copy of your report sooner rather than later. Report any errors and keep your accounts current to avoid any negative impact when it’s time to apply for a home mortgage loan.
Step 2 – Save Money for Buying a House
Purchasing a home requires more financial investment than simply making a monthly mortgage loan payment. Before you move into your new property, you will likely be responsible for paying a down payment and covering closing costs out of pocket. A down payment isn’t always required by your home mortgage lender but typically falls around 20-percent of the home’s asking price if your loan doesn’t have the low or no down payment option. Closing costs fall between 2 to 8 percent of the home’s price. While some sellers will offer to cover a portion, or all, of the closing costs as part of the purchase agreement, it’s a good idea to have the money set aside in savings just in case your seller leaves those fees up to you. In addition to those expenses, you will find that home ownership brings forth an entirely new set of costs that you did not have as a renter. Moving expenses, upgrades, repairs, and furniture purchases are all things that you’ll want to have money set aside to cover.
Step 3 – Find a Real Estate Agent
Take some time to research the most raved about real estate agents in your area. Talk with your friends and neighbors to see who they recommend from their home purchase experiences. Find an agent who checks off all the items on your list of expectations while providing honest, straight-forward advice. Ask them about their experience, knowledge of the area, and marketing skills. Don’t be afraid to get answers for any concerns that you have before you begin. An agent who has your best interest at heart from the start is the key to a successful home purchase.
Step 4 – Apply for Home Mortgage Pre-Approval
Applying for a home mortgage pre-approval will save you lots of time and heartache during your home search. Based on your pre-approval, you know your target price range. Knowing from the start that you can’t afford a home over $300,000 will keep you focused and steering clear of more expensive properties. Having a pre-approval can prove to be very useful if you end up in a bidding war with other potential buyers. This approval lets a seller know that you are ready to go and can complete the process as opposed to a buyer who hasn’t gathered their funds yet.
Step 5 – Place an Offer
Putting an offer on a home involves more than just picking a number. Listen to the wisdom and advice of your real estate agent to make sure that the amount you choose is competitive and fair to the seller without over-paying. You may not be the only buyer who puts in an offer, so you could end up relying on your agent’s negotiation skills to catch the seller’s attention over the other offers.
Step 6 – Closing Time
Once your offer on a property is accepted, it’s time for some legalities. The lender will order several inspections and an appraisal. The lender orders a title search, and there will be plenty of paperwork to fill out. Your agent will be by your side every step of the way to make sure you are informed and comfortable with all the proceedings at this point. Closing day is when you will pay closing costs, sign your final legal documents, and receive the keys to your new home. Congratulations on a successful home purchase!
Your real estate agent is the best source of information about the local community and real estate topics. Give John Neal a call today at 305-333-9030 to learn more about local areas, discuss selling a house, or tour available homes for sale.