A Step By Step Look at Home Buying
Home buying is a big step, but it doesn’t have to be scary. Afterall, its one of the most sound purchases you can make now that the housing market has leveled out. Below you will find a detailed general outline of how the whole process works. If you have any questions please contact me!
Step 1, Get Your Finances in Order
Your credit reports are an ongoing look at how you manage your finances. You must know exactly what your credit reports say about your financial history before you apply for a mortgage, because the reports play an important role in the mortgage approval process and in determining the interest rate and other loan terms that a lender offers you.
If you haven’t looked at your credit reports, you might be surprised at their contents, because errors are common.
Step 2, Get Familiar with the Mortgage Industry
Finding the right loan and lender is crucial to your home buying success. It’s up to you to determine which lender is best for your needs, and it’s always a good idea to have at least a bit of background about the loan process before you talk to a lender.
Step 3, Get Pre-Approved for a Mortgage
Do you know how much house you can afford? Probably not, unless you’ve talked with a lender.
Pre-approval helps you in other ways. Consider this scenario. A home seller gets two similar offers. One is accompanied by a letter from the buyer’s bank that states she is pre-approved for a mortgage in the amount of the offer. The other has no supporting documents. Which offer do you think the seller will consider first?
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Step 4, Determine Your Wants and Needs
Buying a home isn’t as difficult as you might think, even if you’re short on funds, but the process will go a lot smoother if you get familiar with your real estate market and narrow down your wants and needs before you start looking at houses.
Step 5, Learn to Work with Real Estate Agents
Real estate agents represent buyers, sellers, or both–and in some states they can work as neutral facilitators for either party. It’s essential to understand agent duties and loyalties before you make that first phone call.
Step 6, Start Searching for a Home
Your agent will give you multiple listing sheets to study. I’m sure you’ll also pick up House For Sale magazines and read classified ads in your local newspapers. You’ll probably spend time surfing the Internet for homes. You might even plan afternoon drives to preview neighborhoods. Those are all excellent ways to see what’s available.
Step 7, Handle Pre-Offer Tasks
Deciding whether or not you want to buy a house involves a look at its structure and its features, but there are many other topics that are every bit as important to your purchase. Your agent can help you through this process and give you pros and cons.
Step 8, Make an Offer
You’ve finally picked out the perfect home! Looking at comparables and different factors such as time on the market and popularity of the location can be good indicators on how aggressive your offer can be. Your agent will give you advice on what they think a good offer may be, but it is ultimately up to the buyer to decide how much they are willing to pay.
Step 9, Home Inspections and Other Tests
In some states, home inspections are accomplished before the final purchase contract is signed. In other states, inspections take place after an offer is finalized. No matter when you do them, it’s critical to decide which inspections and tests you want to perform.
Talk with your real estate agent or other advisor to find out when inspections should be handled and if additional types of testing are important for your specific area.
Step 10, Avoiding and Correcting Last Minute Problems
As your closing date nears, everyone involved in your real estate transaction should check its progress on a daily basis, because staying on top of things means you’ll know immediately if there’s a problem that must be dealt with.
Step 11, You’re on the Way to Closing
Most of your home buying problems are behind you now and you’re on your way to closing, also called settlement, the event that transfers ownership of the property to you. Just a few more things to sign and transfer, and you’re there!
The steps outlined in this article are a general home buying guide. You will encounter issues specific to your location and your transaction, issues that can best be explained and handled by your local real estate agent, your lender, your attorney, your closing agent, or others who are helping you complete the home buying transaction.
Never hesitate to ask questions. Ask as many questions as necessary to help you understand the entire home buying process. You are making a long term commitment and spending a major amount of money–you’ll feel much better about the transaction if you stay informed and understand what’s happening every step along the way.