Buying a Home
Buying a home can be one of the biggest decisions in your life. And it is definitely one of the most expensive. The process of buying a home can be very intimidating, regardless of whether you have done it before or not.
The first thing anyone considering purchasing a home should do is to determine if purchasing a home is the right decision for them. Buying a home is not just a financial responsibility. It also comes with obligations such as home maintenance, lawn care, and many others. Home ownership is not for everyone. Here is a checklist to ensure you make the right decision for your life.
Finding the Right Lender and Real Estate Agent
Selecting a mortgage lender should be based on more than just the lowest rate. Start by gathering a few rates from different companies, then do some research. Check with family and friends, get recommendations, and then follow up with some interviews. Select a lender that who is a good fit for you as a purchaser, not just a product pusher. Ask a lot of questions and make sure they have answers that satisfy you. A good lender will qualify you for loan and can also make suggestions to help you improve your credit. They should also counsel you on your mortgage payments and how they will fit into your current financial plan.
Once you have the right mortgage lender, make sure you at least get a pre-approved not just Pre-qualified. Pre-qualification is only a guess based on what you tell the lender and is not guarantee of approval. To be pre-approved, a lender will actually pull your credit and get more information about you. Even better, take it one step further and get an actual approval before you start home shopping. That way your offer will look more appealing than other buyers since your financing is guaranteed.
Selecting the right real estate agent can be the difference in saving thousands on your purchase or finding the home that is good enough vs. finding the home that is perfect. Finding the right agent takes a balance of chemistry and credentials. You’ll want to choose someone you like, because you will be spending a lot of time with this person of the next few months. But you also need to choose a person who will look out for your financial and personal interests. Do your research. When you are considering choosing an agent, talk to past clients and don’t be afraid to ask the difficult questions. If you’ve made it this far, you are probably researching me. Interview me and ask me why I am the difference you need.
Check Your Credit Report & Score
One of the biggest factors that can affect your ability to get a mortgage (beyond your actual earnings) is your credit score. Before applying for any type of loan, it is extremely important to understand your credit score. In general, the better your credit score, the better mortgage you can qualify for. If there are errors in your credit report, dispute them and get them resolved. Remeber, the higher your score the better. You can receive one free copy of your credit report per year from annualcreditreport.com.
How Much You Can Afford
How much home you can afford is as unique a number as you are. Every situation is different. A variety of factors influence how much home you can afford including your location, savings, income, personal preference, and your future plans. Buying a home should be a blessing, not a curse, so ensure that you are not overspending and that you have your debts in hand. Make sure you take into account the money you’ll need not just for your monthly mortgage payment, but also for the down payment, closing costs, fees such as appraisals, inspections, and attorneys, and the costs of remodeling and furnishing your new home. There are many online mortgage calculators that will help you assess the monthly mortgage payment for prospective homes. An experienced home loan expert can help you understand all your loan options, closing costs and other fees.
Get the Right Mortgage
There are many different types of mortgage programs out there, but not every mortgage is best for every applicant. Remember to ask your mortgage lender or mortgage banker lots of questions about which mortgage is right for you and your situation. The best deal for a borrower trading up to a bigger house may differ from the one for a first-home buyer.
Look for the Right Home
Before starting your home search, make a list of the things you want and the things you need to have in your home. How many bedrooms do you need? How many bathrooms do you want? Look at where you currently live. How many closets do you have an how big are they? Do you need more closet space or can you make do with less than you currently have? Do you need a big yard for your kids and/or pets to play in? Do you need a fence? Are you a cook or a baker? Do you need a lot of kitchen storage?
Once you’ve made a list of your must-have’s, don’t forget to think about the kind of neighborhood you want, types of schools in the area, the length of your commute to and from work, and the convenience of local shopping. Take into account your safety concerns as well as how good the rate of home appreciation is in the area.
Making an Offer
Now that you’ve found the home you want, you have to make an offer. Most sellers price their homes a bit high, expecting that there will be some haggling involved. A decent place to start is about five percent below the asking price. You can also get a list from your real estate agent to find out how much comparable homes have sold for. 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. But you don’t want to go back and forth too much. Somewhere, you have to meet in the middle. Once you’ve agreed on a price, you’ll make an earnest money deposit, which is money that goes in escrow to give the seller a sign of good faith.
Close on Your Home
Make sure you get a home inspection before you close. It will be well-worth the money spent since it ensures the property’s structural soundness and good condition.
Setting the closing date that is convenient to both parties may be tricky, but can certainly be done. Remember that you may have to wait until your rental agreement runs out and the seller may have to wait until they close on their new house.
Be sure you talk to your mortgage banker to understand all the costs that will be involved with the closing so there are no surprises. Closing costs will likely include (but are not limited to) your down payment, title fees, appraisal fees, attorney fees, inspection fees, and points you may have bought to buy down your interest rate.
You’ve got your mortgage, closed the deal and now it’s time to move in! Whether you use a mover or not is up to you, depending on your financial situation and how much stuff you have to move; perhaps also, whether you have a lot of friends willing to help you move. Either way, you’re done with the home buying process! Just start unpacking and start enjoying your first home! Buying a home for the first time doesn’t have to be a hassle if you’re prepared and you know what to do and when to do it. Choose an experienced home loan lender and a friendly, knowledgeable real estate agent-they are the key to helping you have a smooth home buying experience!