Buying a house can be an experience juxtaposed with excitement and trepidation. Purchasing a home may likely be your biggest financial investment, and you want to avoid buyer’s remorse. Here are six steps to buying a home that will help you feel more confident in the process.
What are the six steps to buying a home?
Learning more about your credit score and the situation you’re in financially is an important first step when buying a home, and you also want to make sure you have enough in savings. You should get pre-approved for a mortgage loan, find a qualified real estate agent, and be prepared to handle the offers that arrive as you set a goal for reaching closing day.
What credit score is needed to buy a house?
You can accept to find that different mortgage companies require credit scores based on their terms and conditions. The typical score needed is 640 or higher for a traditional loan.
There are loans like those from the Federal Housing Administration (FHA) and Veteran’s Administration (VA) that may allow scores of 500 or higher when considering a loan. Keep in mind that you’ll pay a higher interest rate in most cases.
Due to the Fair Credit Reporting Act, you can receive a free credit report from Experian, Equifax, and TransUnion once each year without charge. Check all three reports for errors and delinquent accounts because each may contain different information.
Avoid making any big-ticket purchases that may affect your credit. Do not change jobs or work history until the acquisition of your desired home is complete.
How much money should I have in savings?
Establish cash savings to cover things like the down payment, closing costs, and moving expenses. While the amount of the down payment varies depending on the mortgage loan company and the cost of the property, you can expect to pay around 20 percent of the sale price of the home.
Closing costs are typically between one and eight percent of the cost of the property. In some cases, the seller will take responsibility for some or all of the closing costs, but you want to be prepared to pay them if needed.
It’s best to have enough funds in your savings to cover expenses you know are coming and those that happen unexpectedly. It’s better to have money left over at the end of the buying process than to come up short and have your home purchase delayed.
Should I get pre-approved for a mortgage loan?
Getting pre-approved for a home mortgage loan has several advantages. Having the pre-approval results can save you precious time when it comes to searching for homes and it helps keep disappointment to a minimum.
When you get a pre-approval, the lender will tell you how much money they are willing to loan you for a property purchase. Use this price range to focus on homes that fit your budget and make sense for your needs.
The pre-approval can also give you an edge when you’re submitting an offer to a seller. The seller knows that you are serious about the purchase of the home and that you can complete the purchase if they choose your offer.
How do I choose a real estate agent?
You’ve taken a big step when it comes to finding a real estate agent by looking up more information on the home buying process. We are happy to provide you with helpful information, offer time-saving tips, and answer any questions you have along the way.
We look forward to meeting with you to discuss your real estate needs and goals. Let us use our knowledge of real estate trends and the local market to help you find the perfect home.
We are committed to communicating at the highest level, representing your best interest in all negotiations, and keeping you informed every step of the way. We suggest that you have a list of questions on hand that you would like to have answered when we meet, and we’ll discuss your must-have items that help us find houses to meet your needs.
It’s a great idea to sign up for email updates for property searches. You can create saved searches and receive email alerts whenever a new listing hits the market in the area that matches your saved criteria.
How do I make an offer and negotiate the sale?
In order to make an informed decision when it comes to offers, we’ll advise you on the current market statistics and cover recently sold homes in the area with you. You’ll want to put together an offer that is appealing to the seller but makes sense for your budget.
You don’t want the offer to be low and offensive to the seller, but you want to be honest with yourself about emotions that could push you towards making an offer that is too high. We are here to be an objective voice when you’re struggling with the answer, but in the end, it’s always your choice.
Once you decide on the offer you’re going to make, we will deliver the offer to the seller or their real estate agent. The seller will accept the offer, decline the offer, or send back a counteroffer.
Should the seller decide to send back a counteroffer, you may want to negotiate the terms. We’ll represent you during any negotiations and work to come to an agreement that is fair to you.
What happens after the offer is accepted?
Be patient during required appraisals and inspections. Once you’ve made an offer on a home and the seller has accepted, the bank will require an appraisal of the property to ensure its value matches the amount you’re borrowing.
The home will be inspected to make sure everything is in good, working order and that there’s no damage to roofing or major systems and appliances. The home may also be inspected by a pest inspector to prove the property to be free of termites or other damaging pests.
Once appraisals and inspections are complete, you’re ready to close on your home. During the evaluation and inspection processes, you have the legal right to re-negotiate contract terms based on findings or withdraw your offer if necessary.
Renegotiating terms could involve lowering your offer to cover necessary repairs, such as carpet allowances. There should also be a title search to make sure there are no liens against the property.
The home closing is where the clear title is transferred from the seller to the buyer, closing costs are paid, and you receive the keys to your new home.
Conclusion
Prepare your credit and know your credit score as you begin the home search process. Save adequate funds to cover down payments, closing costs, and moving expenses.
Be realistic about your needs and your budget when looking for a new home and be prepared to make an offer that is objective and not based on emotion. Your real estate agent is there to help you through each step of the home buying process.
Be patient with the process as the property undergoes appraisals and inspections to make sure everything is ready for closing day. When the purchase is complete, you have the keys, and you’re completely satisfied with your home-buying experience, make sure you highly recommend to others the real estate agent that helped you make your dreams of home ownership come true.
