Purchasing a new home requires a lot of time and effort on your part, but by following these seven steps, you can make the buying process more manageable and end up with a house that fits your budget and your family.
If you’re thinking about purchasing a new home, these three steps will help guide you:
Step 1: Take a Look at Your Finances and Get Pre-Qualified for a Mortgage
As a general rule, lenders suggest houses that cost less than three to five times of the applicants’ annual income. That’s if the applicants pay 20 percent down with only a moderate amount of debt. After you have a number in mind, you’ll want to get pre-qualified for a mortgage by giving the banker your financial information including savings, investments, and income. They will then come up with the number that they can lend you.
Keep any houses you look at within this price range. You’ll also need to get preapproved for credit, so your lender can verify your credit and financial status.
Step 2: Hire the Best Real Estate Agent
Whether you’re selling or buying a home, the right real estate agent makes all the difference. Think of them as a partner who knows the area and can give you information not easily available to the general public. They’re also skilled in monetary negotiations and making the transaction run smoothly from start to finish which makes them an imperative part of the process. And the best part is, real estate agents are paid through a commission from the seller of the house, so it won’t cost you anything to use one.
Step 3: Look Around and Make an Offer
Start shopping around and looking at homes in your price range. You’re likely to see a lot of them, so taking notes on things you liked or didn’t like for each address can be helpful. You can also take videos or photos. Just make sure you label them.
Once you feel like you’ve found the best home for your family, work with your real estate agent to negotiate a fair price compared to other houses in the same neighborhood. When you’ve agreed on the offer, the house goes into escrow, giving you time to complete the rest of the home buying process.
Step 4: Get the House Inspected
House inspections typically take place within a few days of the seller accepting your offer. This gives you a chance to withdraw or renegotiate your offer without penalty if the inspection finds a significant amount of structural and other material damage.
If you decide to keep the offer in place, you can ask the seller to fix any problems before you close the sale. You’ll also have a chance to do a walk-through before closing to be sure the repairs have been made.
Step 5: Select a Loan
Lenders have a variety of loans available for homebuyers. Each buyer is unique in his or her priorities when it comes to a mortgage. Whether you want to make sure your monthly payments stay the same throughout the entire loan term, want to keep monthly payments low, or whether you want to work out a way to move again in a few years, your lender can help you meet your goals.
Step 6: Get a Home Valuation
After you’ve chosen your loan, your lender will arrange for an independent appraiser to estimate the home’s value. This way, all available parties know if the offer is a fair price.
Step 7: Close the Sale
At closing, your lender and agent will provide all of the necessary paperwork, including your loan documents, for you to sign. Once the paperwork is returned to your lender, it can take a few days to fund the loan. Once the seller receives the check, you’re good to move in and start a new life for your family.