When buying a home, you want to ensure that you get the best home in the best neighborhood and within your budget. However, the home buying process can be tiresome and time-consuming.
The best way to ensure you get the best house is to prepare yourself, and these steps will help you accomplish the process easier.
Check your credit score
Your credit score will determine if you will secure financing for your house. Mortgage lenders consider your credit score and credit history to determine how much they give you and at what interest rate.
Check your credit score online and try improving it by paying existing debts like credit card debts.
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Determine your budget
Next, you need to figure out exactly how much you can afford. Lenders will tell you the loan you qualify for but ensure you will not be overstretching your finances.
Experts recommend that you should not spend over 30% of your monthly gross income on house costs. When calculating the costs of a home, the first things you need to consider are down payment and closing costs.
Down payment refers to the amount you will be paying upfront. The more down payment you pay, the less the monthly payments will be. Experts recommend that you give a down payment of 20%, but the minimum is usually 3-3.5%.
A higher down payment also helps save on interest and might save you from paying private mortgage insurance.
Closing costs refer to the costs associated with securing and processing your house loan. They vary depending on tax requirements and the amount of your loan, but the average is usually about 3-6% of the buying cost.
Other costs you have to account for include taxes, homeowners insurance, interest, and association dues if your house belongs to a homeowners association.
Get preapproved for a loan
Look for a mortgage lender and get preapproved for a loan. When choosing a lender, compare interest rates, loan terms, closing costs, customer service, and project payments.
Doing this early helps you know how much you can spend, which helps make the search process easier. To get prequalified, you have to provide financial information like your income and investments.
The lender will then tell you how much they can give you, which gives you the price range of homes you can buy. Even if you have been prequalified, it does not guarantee that you will get the loan.
To get preapproved, the lender conducts a background check where they look at your credit history and score, assets, and income. Preapproval guarantees that you can get the loan if your financial situation remains the same by the time you close on the home.
Find a real estate agent
Real estate agents have skills and knowledge in the home buying process that will make it easier for you. Real estate agents represent you throughout the whole process and make negotiations on your behalf.
To get the best agent, some questions you need to ask include:
• How many years of experience do they have?
• How many clients are they working with?
• What do they know about the real estate market in the area you want to buy a home?
Start the search process
When searching, ensure you are specific to the area and type of house you want, for example, apartments near Slippery Rock University. While searching online is easy, consider visiting the homes in person.
Some things you should consider include:
• The style, size, and condition of the house
• The commute to your workplace
• The security and development of the neighborhood
• Amenities around the home, like schools, hospitals, and stores
• Parking area
As soon as you find a house you like, start negotiating and make a fair offer. Ask your real estate agent to look at the price range or similar homes around and how many homes have been sold around recently. You should also include contingencies in the offer.
Get a home inspection and appraisal
A home inspection lets you identify any structural issues that need repair immediately or in the future. In case the house requires major repairs, ask the seller to make them before closing the deal. In case they don’t agree to this, you can always withdraw the offer.
An appraisal estimates how much a house is worth, and most lenders require that to know how much money to give.
Get homeowner insurance
Homeowners insurance helps protect your new home in case of damages by fire, natural disasters, or theft. Shop around and compare the prices and coverage before buying the insurance.
Close the deal
At closing, you have to sign all the necessary paperwork like loan documents, promissory notes, certificate of occupancy, and deed of trust. The seller also passes the house’s title to you, and you have to pay the closing costs.
