There are many milestones that people have to cross in life, and one of them is purchasing a home. While many people dream of their perfect home, there is a lot that goes into the process before you can finally begin living in it. For first-time buyers, the entire process may even be intimidating since they might not know everything they need to do and if they’ve made the right decisions at the end of the day. Below you will find our 8 Steps to Buying a Home guide that you can use a roadmap through the process of buying a home.
To avoid making any mistakes and ensure a smooth transaction that ends with the keys to your new house, here are some steps that you can follow: Home Buying: 8 Key Steps to Success
1. Check Your Finances
Before starting the search for your dream home and falling in love, seriously examine your savings. Since you’re making a significant investment, you will need to be prepared for expenses that come with buying and maintaining a new home.
Have a look at your savings and think about if you have emergency savings for a few months, which can be your backup to keep your home running after the initial purchase. You will have to pay upfront costs, such as down payments and costs, before you can get your hands on your new home.
2. Figure Out Your Credit Score
Once you’ve had a look at your finances, another significant step to take is to understand your credit score because it will affect your chances of receiving a loan. If you have to apply for a loan, your mortgage lender will want to check your finances and your credit score, so you should be a step ahead of them before applying.
Your credit score is tallied based on your payment of bills and your debt-to-income ratio. Before you get into the process, you will need to access your credit report. If you have a high credit score, you will have a chance at a better interest rate compared to someone with a lower one.
3. Think About A Home That Suits Your Needs
There are plenty of homes in the real estate market, ranging from condos to duplexes, townhouses, and traditional single-family homes. However, every option has its benefits and drawbacks depending on your preferences and goals. So, while you may have big expectations, think about the home you require realistically and what will make life easier for you and your family.
While looking for your dream home, you may come across homes that seem great and have a low cost but also require repairs. It might seem like a great bargain initially, but you may lose much more money, time, and effort to make it livable or perfect again.
4. Decide Your Budget for a Home
With a moderate debt load and a higher downpayment, your new home shouldn’t cost more than four or five times your annual income.
While some mortgage lenders won’t want to lend you higher amounts, some will be willing to give you a larger sum if you have a good credit score and financial history. However, you shouldn’t accept it just because they’re offering; making this mistake will leave you in debt.
When trying to figure out the price of a home, it is important to look at the total value of the home, the monthly payments, the property taxes, your homeowner’s insurance as well as any repairs that need to be made.
5. Get Some Help
Hiring a professional real estate agent is one of the most important of the 8 Steps to Buying a Home. They can help find homes for you according to your preferences and arrange meetings or visits during open houses.
They can check out nearby listings based on your preferences, negotiate prices when you settle on a home, help you apply for a loan, and fill out paperwork. Real estate agents have a fiduciary responsibility to their clients, and they can guide you through the real estate transaction.
6. Keep Your Pre-Approval Letter
Once you’ve settled on a mortgage amount with your lender, ask them to provide you with a pre-approval letter. When shopping for homes, buyers will want to see this letter to weed out serious buyers from simply window shopping.
7. Shop for Homes and Make Offers
Once you’ve received your pre-approval letter and found homes you like, ask your real estate agent to take you to open houses. When visiting homes, note the plumbing, electrical systems, doors, and windows to see if they move smoothly. You should also check for cracks and other spots that need repairs.
If the home meets all your needs, such as regular maintenance and convenience to schools, offices, or other amenities, ask your real estate agent to determine a price based on homes in the neighborhood. As soon as you agree, the home will move into escrow until the inspection and closing process are complete.
8. Get Ready to Close
Once the home is placed in escrow, a home inspection will be carried out to check if there are any issues with the property. If there are any issues in the finding, you can renegotiate your offer and lower the price depending on how large the problem is and how much money will be required to fix the problem.
You must complete the final paperwork after the inspection and appraisal are completed. Then, once your loan is funded and the seller receives your check, you’re free to move into your new house!
Be Prepared in Advance
Buying a home is a significant investment and can take a toll if you’re a first-time buyer. While your real estate agent can help smooth the process, it is vital to research your own and stay prepared to avoid stress and complete the transaction. Then, once you’ve complete the 8 steps to buying a home and have closed on your new home, you can celebrate a new milestone in your life.
Have Questions? Ask The Lott Group
Your real estate agent is the best source of information about the local community and real estate topics. Call The Lott Group at 623-313-1158 to learn more about the local areas. Call us to discuss selling a house or a home mortgage or tour available homes for sale.