Beginners Guide to Buying a Home; Here is What to Do
The time has come, and you are ready for a change. When it comes to buying a home, it can be a daunting process. The decision to buy a home is not an easy one and comes with lots of stress, which is why we’re happy to provide this guide to ease the process and take you through step by step.
1. To Use, or Not to Use a Real Estate Agent
If you choose to use an agent, which we strongly recommend it is essential to research agents conversant with clients such as yourself, who are well-versed with the property type you need, and the area where you are looking to buy your home. With the rise of real estate fraud, you must do your homework on the agent, too, to be cautious. We’ve have a national network of top vetted agents that you can tap into here.
2. Research Homes For Sale
3. Check your Credit Score & Get Pre-Approved
Saving up for a house is no walk in the park; you might need a small boost to secure your dream home. Before approaching lenders, do your credit score review to gauge the range in which you may fall. Credit reports are easy to access, you can check your credit here yearly. In the event of an error in your reports, you can contest them early enough before applying for financing.
If you have a high credit score of 720 or higher, you are more likely to have a lower interest rate on loans. However, the criteria for qualification largely depends on the lender. Loans by FHA can be approved with a credit score of about 580 or higher.
Next, contact a lender to get pre-approved, the financial evaluator will explain the maximum amount you can borrow and help you understand your monthly payment. With this information, you can begin to browse through homes that you can afford while your agent looks as well and sets up showings for you.
4. Make an Offer
After choosing the right home, make an offer based on comparative market analysis (CMA) as calculated by your agent. This analysis will help make a more informed choice as it determines the market value compared to the latest sales in that area. It guides in negotiating for a fair price.
Be sure to go through the contract and its legal requirements or policies – depending on your market’s customs, the Real Estate Agent or a Real Estate Attorney will be involved to guide you at this point.
5. Surveying and Inspection
Before buying the property, it is ideal to make sure the building and surroundings are inspected to avoid unwelcome surprises. You’ll hire a Licensed Home Inspector and this is usually scheduled about a week before or after you sign the contract – depending on customs in your market. In case of unpleasant findings, you will communicate with your agent on the way forward, either for termination of the deal or a seller credit or seller repair plan.
If no serious issues were found, you can go on to sign the contract.
After or in parallel with ensuring that everything checks out, it is time to ensure that your lender approves of your purchase.
You can choose to apply for a loan with the lender that pre-approved you. You must keep clear communication as they will request all the necessary documents needed to complete the initial process.
Your lender will then hire an appraiser. An appraisal will be conducted, after which you and the agent will get the report. The assessment should either match your offer price or come above your price for you to be clear to close. Thereafter, underwriting will be reviewing docs, requesting more docs, verifying employment and working with the Title Company and Attorneys to get the loan clear to close and make sure title is clear and will be able to transfer to you with out issue.
7. Homeowner’s Insurance
Having proof of a homeowner’s policy is a requirement before closing. If you do not have one, you can inquire with the seller about the house’s current policy and continue buying it or shop for a new policy that you feel will work best for you.
If any repairs were promised, ensure they have been completed on the Final Walkthrough of the home, typically scheduled the day prior to closing. Depending on your market, the entire process will have taken between 30 to 60 days from offer to closing. Closing costs will range between 3-5% of the price of the house. On closing day, anticipate spending a few hours at the title company for finalizing the paperwork.
Finally, sign the docs, get the keys, and enjoy your newly acquired home.