Buying a home can be an intimidating process if you are unsure of the steps. Fortunately, we’re here to make it easier on you. Check out these six steps to buying a home before you begin searching for your dream home.
Know Your Credit Score
Your credit score is important when it comes to securing a home mortgage loan. For this reason, you want to know yours and understand your debt to income ratio.
Secure a copy of your credit report from each of the three main reporting agencies. Visit AnnualCreditReport.com to order your copies from TransUnion, Equifax, and Experian without cost once a year.
Once you have your reports, check them over for errors and delinquent accounts. Report all mistakes to the agency and set up a plan to remove past-due accounts. It’s important to check all three reports because each one may have different information that produces separate credit scores.
The Importance of Saving Money
Make it easier for the mortgage loan company to provide you with a positive response by having money set aside for a down payment. The recommended amount to have on hand is 20 percent of the purchase price of your new home.
Keep in mind that there will also be other fees associated with the home buying process. While some sellers pay part of all of the closing costs, you should be prepared to cover those when closing day arrives.
Having a larger down payment can impact your loan types, interest rate, and length of mortgage. It’s a good idea to have extra funds on hand in case you need to upgrade something before moving in to the home, and don’t forget moving expenses.
Find the Right Real Estate Agent
If you have the right real estate agent, the home-buying process should be much more enjoyable. If you have friends or family who have purchased a home in recent years, ask them who they used and what they did or did not like about their agent.
You want a real estate agent who listens to your needs, communicates at the highest level, and is a skilled negotiator. Set up an appointment to speak with the agent and ask important questions about their experience and real estate knowledge.
Get Pre-Approved for a Home Mortgage Loan
You already know your credit score because you’ve been following our advice. Make an appointment with a mortgage loan officer to discuss a home mortgage loan.
Ask them what paperwork you are going to need to bring in for pre-approval, so you don’t waste time going back and forth for documents.
You may want to set up an appointment with one or two more lenders to see who is going to offer you the best rates for your loan and save you money in the long run. Ask as many questions as you need to make sure you understand what you will be signing.
Your pre-approval can help you stay focused when your searching for homes because it let’s you know exactly what your price range is for buying. In a bidding war with another buyer, your pre-approval may come in handy.
This letter of approval lets a seller know that you can follow through with the sale, and this may tip the scales if the other buyer doesn’t have this advantage.
Placing the Right Offer
You have found the house of your dreams and now it’s time to put in an offer. Before you have your agent write up your first offer, you need to consider a couple things. First, you need to know the highest amount you’re willing to place within the offer.
If you know how high you can go, you have less of a chance of getting caught up in a bidding war and overextending yourself. Keep in mind that you may not want to buy a house for as much as you’re pre-approved, but it’s nice to have options.
Secondly, you need to have a conversation with your agent and have them advise you of comparable sales in your neighborhood in order to get a feel for what homes are selling. With your agent’s advice, now you’re ready to write up your first offer.
What Happens After Offer is Accepted?
After your offer has been accepted on your new home, you’re on your way to closing day. If you’re opting to have a home inspection done, which we recommend you should, then that will come first. Once the home inspection is finished and all repairs are complete, your bank will order the appraisal on the home.
The bank will let you know when the appraisal has been finished, and then your agent or the bank will order title insurance, which is just a policy ensuring that the property you’re purchasing is free and clear of any liens or loans or any issues that may cause problems.
After the title insurance is completed, a deed will be ordered and possibly a termite inspection if required by the contract or your bank. Once all the paperwork is completed, it’s time to come sign the papers and walk away with keys to your new home!
Your real estate agent is the best source of information about the local community and real estate topics. Give the Nancy Kowalik Real Estate Group a call today at 856-478-6562 to learn more about local areas, discuss selling a house, or tour available homes for sale.