Buying a home is a multi-step process that can be complicated, particularly for first-time buyers. It is crucial to be aware of each step, as competition can be steep: one misstep and the keys to your dream home could go to another family. Read on to explore the path to acquiring your greatest investment to date.
Step No. 1: Meet with REALTOR®s
A REALTOR® acts as your guide during the home buying process. Their responsibilities include handling negotiations and other details with a powerful combination of skill and experience. Ask friends/family for referrals and read online reviews/testimonials. Don’t get shy because you have to interview multiple agents to find the right one. You might click with certain agents and not others. If you’re purchasing high-end real estate or a second home, you may want a REALTOR® who specializes in that niche. Look for agents who have realistic expectations and are experts in your desired neighborhood.
Step No. 2: Choose the right lender for you
Before the 1930s, owning a home was a rarity for anyone not in the elite set. Bank loans for that specific reason did not yet exist. Now potential homeowners can seek out multiple banks or lenders to attain a mortgage for their dream home. Lenders generally are the financial anchors in the home buying process. Look for ones with competitive rates, and who uses communication methods that put you at ease.
Step No. 3: Get your financial house in order
A three-digit credit score and credit report tell our financial story more than our bank accounts do. We are the payers of debt, and the process of paying it spans our entire lives. Paying cash for everything results in a lower score than juggling debt. A steady job and income can bypass a bad score if you are willing to put down 10-20 percent. To improve scores, pay all bills on time. A single missed payment can stay on your credit report for seven years, with recent delinquencies impacting scores the most negatively. Additionally, don’t exceed credit limits and keep balances below 30 percent of your credit limit.
Step No. 4: Apply for pre-approval
A lender determines how much money you can spend on your home sweet home. Debt to income ratio is a massive consideration. Expenses and fees such as insurance, association dues, taxes and utilities are all factors in setting the limit on what you can afford. From the lender’s decision, you will know which homes are in your price range.
Step. No 5: Know what you want
Your real estate agent will not know where to begin if you don’t. Start thinking about must-haves. They can range from location to the number of bedrooms. Wants can include a pool or a guest home. Compromises are what you are willing to exchange for your wants. For example, a great school district can be attainable if the number of bedrooms is reduced. Figure out what will make your home your favorite place and what you can do without, at least temporarily.
Step No. 6: Begin the listing search
Open houses will now become your favorite way to spend an afternoon. Your REALTOR® will begin showing you homes that fit your criteria. While it might be exciting to step into someone’s life for a few hours, this is actually a fact-finding mission. Take notes and jot down ideas about what you like and don’t like. This will streamline the process and give your REALTOR® all they need to know to make you a happy homeowner.
Step No. 7: Show those Benjamins
Your REALTOR®’s skills and experience are crucial to your home buying success. They will hold your hand as you make an offer on a home. It will include the down payment and may include contingencies such as hiring a home inspector. You can now watch your agent shine as the offer is negotiated.
Step No. 8: Check off mortgage approval
An accepted offer will begin the closing stage of the home buying process. Your lender will give the final approval for the purchase and the specified closing date. This is not the time to celebrate by splurging on big ticket items. You might have to pay property taxes or insurance for the first full year, starting on the closing date. Unexpected expenses can show up without warning.
Step No. 9: Follow through
Get that promised home inspection. You do not want to fix future issues on your final walk-through. If, by chance, something arises due to natural events, including tropical storms or freezing spells, discuss it with the current owner to have the repairs done or knock off the expense from the closing costs.
Step No. 10: With the closing
When you reach the final step in the process, pat yourself on the back for a job well done. The closing table is where you want to be at this point, where the deed will be transferred from the seller to the buyer. Get your John Hancock ready because there could be lots of paperwork. An attorney or settlement agent will most likely be present.
May your new home be the happiest one on the block.