The home buying process often seems like a never ending maze for many first time home buyers.
Buying a home is not rocket science!
There are millions of homeowners across the country and you too can buy a home.
Regardless of what you think or assume about buying a home, these 10 easy steps will make the entire process easier:
How To Buy A Home
Let’s get started!
1. Figure Out How Much Home You Can Afford
If you have a fair amount of other debt and intend to make a 20% down payment for your new home, many lenders strongly recommend that you consider homes that won’t cost any more than three to five times of your annual household income.
However, you can only make this decision depending on your financial capabilities.
Here’s an Affordability Calculator you can use to figure out the cost of the home you can afford.
You can create an emergency fund account to start saving for your down payment as well as any other effective saving method you can think of.
2. Get Prequalified and Preapproved For A Loan
It is smarter to know how much loan you’re eligible for before you start house hunting.
The easiest way to figure that out is to get prequalified for a mortgage.
To get started, you will be required to provide some data about your finances like your household income, investments and your amount of savings to your lender.
Your lender will assess whatever financial data you have provided and let you know what amount of loan you’re eligible for.
This will give you a crystal clear picture of the type of homes you should start shopping for.
Once you’re done with prequalification, you should move on to being pre-approved for credit.
To do this, you will be required to submit several financial paperwork to enable your lender to ascertain your financial status and credit.
For a complete guide about credit, here’s a simple guide to learn more about credit score.
And here are the key factors that determines your credit score.
3. Start Your Search For The Right Home Early
Once you figure out how much home you can afford, start searching for homes within your budget range.
Visit as many real estate websites as you can to see several different home listing in your preferred locations.
You can find a whole lot of listing on Zillow.
You can use Livability to compare the most suitable places for you to live.
You can use AreaVibes to compare neighborhoods, cities, towns using several different metrics including crime rates, schools, public transportation, and commute time etc.
You should make a note of specific properties that you’re interested in and how long they have been listed.
You should lookout for changes in asking prices too.
This will make it easier for you to understand housing trends in cities, towns or neighborhoods you’re interested in.
4. Hire A Reputable Real Estate Agent
Real estate agents can take a lot of loads off your shoulder when you’re looking to buy or sell a property.
A reputable real estate agent can give you valuable information about cities, towns, neighborhoods and homes that you wouldn’t have thought about.
Real estate agents have a vast level of experience about the home buying process, they are familiar with many real estate markets, can negotiate brilliantly and do a whole lot more to make the home buying process easier.
The best part? You don’t have to pay a dime for hiring a real estate agent.
All their efforts are compensated from the commission the home seller is required to pay.
So don’t settle for a cheap agent, hire a reputable one with a strong track record.
5. Shop For Homes In Your Price Range and Make An Offer
Start hunting for homes within your budget range.
You should have a checklist of what you really need in a home so you can start ticking off the boxes as you visit different properties.
Since you might end up checking several different houses, it might be
Consider taking photos and videos of each home you’re interested in so you can remember what you really like about them.
It is important to mention that when you’re shopping for a home, never overlook whatever may seem like the smallest details.
Repairs and maintenance costs add up and they are made up of some of the things you consider as irrelevant details.
- Try to open and close as many windows and doors as possible to find out if they are working appropriately.
- You should test the plumbing system by turning on the faucet in the kitchen and running the shower to observe the water pressure. You can also easily observe the amount of time it takes to get hot water.
- Turn as many switches as possible on and off to test the electrical system.
Once you find a home with all or most of the features on your checklist, you should go ahead and do some research about the neighborhood.
- What’s the crime rates in the neighborhood?
- Is the house close to public transportation and other relevant public amenities?
- Are there sidewalks and enough street parking space for you and your visitors?
- Are there great schools in the neighborhood and is it located in a great school district?
- Is the home close to places you’ll have to visit often such as recreation centers, grocery stores, restaurants, parks, and tourist centers etc.?
You should take all the time you need in the world to find your most preferred type of home in the city, town or neighborhood you’ve always wanted.
Together with your real estate agent, come up with a strategic method to negotiate a fair offer depending on the value of similar homes in the same neighborhood.
As soon as you agree on a deal with the seller, the home will go into Escrow and payment will be released to the seller when you complete all other things required in the home buying process.
6. Hire A Professional Home Inspector
As required, home buying offers are dependent on inspection of the property to look for signs of structural defects or things that could need repairs or potentially damage some parts or the entire property in the near future.
The real estate agent you hire can help you find and hire a professional home inspector within a few days after the seller accepts your buying offer.
The home inspection contingency is absolutely crucial because it will protect you from buying the wrong property.
It also gives you the opportunity to renegotiate your offer or withdraw it without being penalized if the home failed the inspection.
Once the home inspection is completed, the inspector will give you and the home seller a report of the outcome.
Based on the report, if there is anything to be fixed, you can decide to ask the seller to repair it before closing the sale.
Before the transaction is closed, you will get the chance to inspect the house to confirm if the seller has done
You have the freedom to walk away from the deal if the seller failed to carry out the repairs as agreed.
7. Partner With A Mortgage Banker To Select Your Loan
Many lenders have several different competitively priced mortgage options and lenders are well-known for top-quality customer support.
Chances are, you will have several different questions to ask when you’re buying a home.
Your mortgage banker will provide all the answers you need.
Almost every first time home buyer has their personal priorities when reviewing a mortgage.
While some buyers are keen to slash their monthly payment to as low as they can, others are only interested in preventing their payments from ever rising.
Likewise, some buyers choose some certain mortgage program because they may possible relocate again in the next few years.
To get started, here’s a user-friendly guide to the types of mortgages.
8. The Home Will Be Appraised
Your lender will hire an appraiser to assess the property and give a report that contains an independent estimate of the value of the home you’re planning to buy.
The appraiser must be a staff of a third-party firm and should not be associated with your lender in any way.
The appraiser will provide a crystal clear report about the home’s value to let all the parties involved understand that you’re not paying beyond the actual worth of the property.
9. Complete All The Paperwork
There are several different paperwork involved in the home buying process.
As expected, your lender will hire a title firm to take care of all the paperwork and to ascertain that the seller is the legitimate owner of the property you’re paying for.
10. Close The Deal
When it’s time to close the deal, you will be asked to sign all o the necessary paperwork and it includes your loan documents.
Once the paperwork is returned to the lender, it will take a few days for the loan you applied for to be funded.
As soon as the seller receives the check, you’ll become a homeowner!
Now you can heave a sigh of relief and start enjoying the benefits of being a homeowner.