Buying a home can be one of the most exciting experiences of a lifetime. However, if you’re not familiar with the processes and prepared for each step, buying a house can be a source of stress and heartache. Let’s explore the 6 steps to buying a home.
Clean Up Your Credit
Having a clean credit report is imperative when buying property. When lenders consider your loan application, they want to see that you’ve made payments on time to other creditors. When you have derogatory statements on your credit report, or a low credit score, you lower your chances of being approved for a home mortgage loan. Before moving to the next step, order copies of your credit report and take the time to rectify any negative marks. Also, during this time, avoid any major purchases such as cars, new furniture, or other debts.
Even with a home mortgage loan, you’ll be required to make a healthy down payment on the house you buy. Furthermore, closing costs are not typically included in your home loan, so you’ll need to save a little extra for the closing costs. You may also be required to put down an earnest money deposit when making an offer on a house. Many first-time buyers find themselves “house poor” after investing all of their savings into their new house, so it may be wise to keep a nest egg in your savings account that is above and beyond your down payment and closing costs.
Home Mortgage Pre-Approval
With a clean credit report and substantial savings, it’s time to seek pre-approval for your home mortgage loan. Pre-approval is important for several reasons including determining an accurate budget, qualifying yourself as a buyer, and empowering negotiations. Before beginning the house hunt, complete your pre-approval for your home mortgage loan.
Hire the Right Real Estate Agent
Finding the right real estate agent is an important part of the home-buying process. Agents have different specialties and different personalities. Interview agents before signing a contract. Ask about experience, specialties, communication methods, and exit strategy in the event that the relationship doesn’t prove fruitful. Avoid working with family members when possible. Beware of agents offering the lowest commission rate as this may be a sign of inexperience or lack of success in placing buyers with the right house.
Finding the Right House
By this point, you’ve probably conjured a wish list, as well as identifying your “must have” items in your new home. Knowing what your budget is can help refine this list to reasonable items. Many first-time buyers have a false idea of what their money will buy, so be prepared to adjust that list to fit your budget. You may also find yourself adjusting your desired location. Prime locations tend to be more expensive, so to obtain the items on your wish list, you may have to sacrifice the area.
Sealing the Deal
When you find the perfect house at the right price, it’s time to put in your offer. Expect that there may be other offers placed on the house you’d like to buy. You may have to adjust your offer to beat out others who have expressed interest. When the offer is accepted, the house will undergo an inspection and an appraisal to make sure the house is worth what you’ll be paying. The fees for inspections and appraisals are included in your closing costs. Be patient with the process as each step along the way could be time-consuming. During the inspection and appraisal, the contract is open to negotiation in the event that problems are discovered, or repairs need to be made. You can either request that the seller make any repairs, or you can ask for a lower price on the property to allow for repairs after you move in.
Preparing yourself for your home-buying experience could alleviate stress and unnecessary heartache. Make sure your credit is in good order. Save enough for deposits, earnest money, and closing costs. Get approved for your home mortgage loan before you shop for houses. Hire the right real estate agent. Refine your wish list. Be patient with the process as buying property takes time. But above all, enjoy the journey to home ownership.
Your real estate agent is the best source of information about the local community and real estate topics. Give Jennifer Bierfeldt a call today at 540-422-3264 to learn more about local areas, discuss selling a house, or tour available homes for sale.