A 7-Step Guide To Buying A Home

A 7-Step Guide To Buying A Home

Buying a home, whether you are a first-time home buyer or buying a second home, is both an exciting and intimidating process. These feelings are perfectly normal because buying a home can be one of the biggest purchase decision of your life.

It’s a little overwhelming if you’ve never done it before, but you still feel nervous about it even if you’ve done it before.  Still, the road before you has been mapped out for you.

Fortunately, there are specific steps that you can take to make the whole process more manageable and to make sure that you get everything done, from working with a reputable title company like Elevated Title to choosing the best loan options.

Step #1: Credit Report 

It’s always a good idea to check your credit report and to review your score. You can legally get a free copy once a year by visiting annualcreditreport.com, a website jointly run by Equifax, Experian, and TransUnion, the three major credit reporting agencies in the US. The scores range from about 300 to 850; and the higher your score, the easier it is to qualify for a loan with favorable terms. If you find any errors in your credit report, you can dispute them in order to improve your score.

Step #2: Decide Your Price Range. 

Naturally, you only want to buy a house that you can comfortably afford. Otherwise, you will struggle to pay the mortgage and may even lose the home if you can’t keep up with your payments. Use a mortgage calculator to figure out how much you can afford to pay. Down payments can vary. You don’t have to put down 20 percent as was a common practice in previous generations. It’s advisable to talk to an experienced home loan expert to figure out all your various loan options, your closing costs, a variety of other fees, and your monthly payments.

Step #3: Get a Lender and Real Estate Agent. 

When shopping around for a mortgage lender, do your due diligence. Ask for recommendations from family and friends. Check these names with the Better Business Bureau. Interview at least five mortgage lenders. Find someone who you feel is right for you.  Rather than ask for a pre-qualification, ask for a pre-approval, which will give you a better idea about the size of loan you can get. Taking this step will make it easier to convince a seller to accept your offer because you can guarantee your financing.

Step #4: Shop for a Home. 

Before you go out and look for a home, it’s a good idea to create your ideal scenario. This way, you will find a home that is close to your needs.

Here is a checklist of some basic things you may want to consider:

  • The number of bedrooms.
  • The number of bathrooms.
  • The size of the rooms, particularly the kitchen.
  • The number of closets, cabinets, and storage spaces.
  • The size of the yard.
  • The type of neighborhood, particularly in terms of safety and home appreciation rates.
  • The proximity to schools, shopping centers, recreational areas, and your place of work.

Step #5: Make your Offer.

Once you’ve found a home you like, then it’s time to make an offer. You don’t want to buy the house at the stated price because the seller will have priced it higher to allow room for negotiation. As a rule of thumb, ask for a figure about 5% of the asking price. However, if the seller has priced it well-above market rates, you might be able to get it at an even lower price if your real estate agent can provide you with some figures on how much people have paid for comparable homes. After you and the seller have agreed on a price, then you will put down an earnest money deposit. This is good faith money that will go into escrow.

Step #6: Choose the Best Mortgage Loan. 

You will have a variety of options when it comes to loans. Three of the most common ones are an interest-only mortgage, fixed-rate mortgage, and an adjustable-rate mortgage. Ask the lender about the details of each one so that you can decide which one will work with your financial situation.

Step #7: Close and Move-In 

Don’t be in a hurry to close. First, arrange for a thorough home inspection. Although it will cost you money, you will avoid buying a house with hidden pest or structural problems. Next, arrange a closing date which will work for both you and the seller. Finally, get a good understanding from your mortgage banker about all the closing costs, as there will be a variety of fees to pay. After these final steps, you will be ready to move in.

Although the home buying process has many aspects to it, you can use these 7 steps to avoid feeling bewildered and to make sure that everything works out to your satisfaction.

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