Buying a home can be a pretty intimidating process, especially if this is the first time you have ever done it. There can be so many different steps to think about, additional costs you may have not realized before and the almost impossible process of finding an affordable house that has everything you want. It can seem overwhelming. However, we are here to help! Below are some great steps to help you gather your thoughts and plan out what you need to do in order to get the best house and deal for you. If you have any concerns or questions about the steps, please do not hesitate to contact us. We will guide you through the whole process.
Step 1: Check your Credit Report & Score
This first step can determine if you are able to purchase a home at all, so this is a very important step. There is no point doing a lot of research on a house you like, only to find out later down the road you cannot even afford it. You are allowed one free copy of you credit report per year by visiting annualcreditreport.com. Credit scores range from 300-850. The higher you are; the better loan you can receive.
Step 2: Create a Budget
Creating a budget can be pretty easy and can even be done online. There are many different sites that offer mortgage calculators online that can help you. This way you can create an affordable monthly payment. When doing this, make sure not to forget costs for the down payment, closing costs, fees for attorney, appraisal and inspection, remodeling or furniture. There’s lots to consider! To get the most accurate budget, I highly recommend getting pre-qualified through a lender. I will talk more about the pre-qualification and pre-approval in the next step. You can also skip Step 1 and 2 and have your realtor and lender guide you through.
Step 3: Find the Right Lender and Realtor
In order to find someone who is right for you, it is important to shop around. Talk to a few different lenders and ask many questions. This way you can see who has answers that satisfies you and gives you confidence that they will do a good job for you. We have several lenders we often work with, so if you need a lender recommendation, please feel free to ask us. First thing to do is to get pre-qualified. Pre-qualification is based off only what you tell the lender, thus have no guarantee. If you get pre-approval, then this will give you a better, more definitive idea of how big of a loan you qualify for. It makes it even easier if you do this before you start home searching. This will make it easier when you make an offer, and also more appealing to the seller. You can start your home search after the pre-qualification. It never hurts to keep your eyes on the market. You can contact your realtor and request home search e-mails sent to you at no cost. Although sources like Zillow and Trulia are useful, they don’t always have the most accurate information.
Step 4: Look for the Right Home
The easiest thing to do, in order to narrow down your choices is to make a list. Make a list of the things you need to have in your house such as how many bedrooms or bathrooms. This will help you get an idea of what to look for when searching. It is also important to make a list for what you want in regards to neighborhoods, schools, length of commute and distance to grocery stores as well. A good realtor will be able to give you some suggestions and recommendations through this process.
Step 5: Make an offer on the Home
When making an offer, keep in mind that most sellers price their homes a bit higher than they are worth. This is because they expect some haggling to occur. An acceptable price to offer at first is around 5% below the asking price. However, once you make an offer don’t think that is it. You may need to make a counter offer. This is where a n experienced real-estate agent skills comes in handy. Once you and the seller have agreed on a price, you will have to make an earnest money deposit. This is the money that goes into escrow to give the seller a sign of good faith.
Step 6: Get the Right Mortgage for your Situation
There are many different types of mortgages to choose from, however you should know the three basics: adjustable rate, fixed rate and interest only. Adjustable rate mortgages are shot-term mortgages that offer an interest rate that is fixed for a short period of time, generally between one to seven years. After this time has passed, the interest rate can adjust up or down every year, depending on the market. This type of mortgage is more applicable to those who do not plan on living in their home for very long, or want lower interest rates and payment.
Fixed-rate mortgages are more traditional and are able to offer a fixed interest rate for a longer period of time. Time period being usually between 15-30 years. This type of mortgage is good for people that like to have a predictable payment and plan on living in their home for a long period of time. Both of these rate mortgages can have interest only payment. This means that for a certain amount of time during the loan term, you can pay only enough to cover the interest portion. The benefit to this is that you can increase your cash flow by not paying principal. Both myself and your lender can help you understand how the loans work. It can be intimidating the first time.
Step 7: Close on your Home
Before closing a home, it is imperative to get a home inspection. It is worth the money because it ensures that the property is structurally sound and in good condition. Make sure to talk with your banker to ensure you understand all the costs that are involved with the closing. That way there are no surprises. For the most part, closing costs usually include down payments, title fees, appraisal fees, attorney fees, inspection fees, and points you may have bought to buy down your interest rate. You are more than welcome to
Step 8: Move In
Now that you have completed the home buying process, all you have left to do is move in and unpack in your new home! I hope you stay in touch! I would love to hear from you again.
Buying a home doesn’t have to be so scary, you just have to make sure to be prepared and know what to do. Choose an experienced home loan lender and a knowledgeable real estate agent.