The Home Buying Process
You Are Just Steps Away From Buying A Home!
Step 1: Get Your Finances In Order
If financing is required, you should check your credit. By law, you may receive one free credit report per year. You can do this by visiting www.annualcreditreport.comThe higher your credit score, the better loan you will qualify for. Check your report for errors. If there are any, dispute them as it will help your credit score. You can also check your credit score for free at www.creditkarma.com.
Step 2: What Can You Afford?
There are loans available with little to no down payments required. But you must determine what funds you have available for your purchase because besides down payment there are closing costs, fees (such as appraisal, inspections, survey, insurance, etc.) and expenses to move, remodel or furniture. Additionally, you need to determine how much your budget allows for a monthly house payment. There are several online mortgage calculators that will help you calculate an affordable monthly mortgage payment. An experienced home loan expert can help you understand all your loan options, closing costs and other fees.
Step 3: Select the Right Real Estate Agent and Loan Officer
The right Real Estate Agent can be your trusted guide through your home purchase journey. Find one that has the skills, experience, and resources needed and is available to support and advise effectively. They can recommend mortgage loan officers that will help you get pre-qualified or pre-approved for a home loan. This will give you a better idea of how much of a loan you can qualify for as the lender will review your credit and get more information from you about your income and debts. This is necessary before you start home shopping and will make the sale go much quicker. Before you select an agent or lender, get recommendations, and then ask lots of questions and make sure they have the answers that satisfy you. Make sure to find someone that you are comfortable with and who makes you feel at ease.
Step 4: Look for the Right Home
Wants vs. Needs. What do you want in your new home and what do you need? Make a list of the things like number of bedrooms or baths, kitchen size or features, garage, fireplaces, porches, outbuildings, yard size, etc. Then prioritize your list so that you make sure to get what you need and then as many of your wants as possible. Don’t forget to think about the kind of neighborhood you want, schools, commute to and from work, and the convenience of local shopping. Consider any safety concerns, as well as the potential for home appreciation in the area.
Step 5: Make an Offer on the Home
Now that you've found the home you want, you must make an offer. Most sellers price their homes expecting that there will be some negotiating involved. Your real estate agent can provide you with a list of what comparable homes have recently sold for. An offer is more appealing when it is in writing. Your agent will prepare your offer according to the terms you have discussed and that reflects the financing you have been pre-approved for. Once you have made your offer, the seller may make a counteroffer to which you can also counteroffer. Your agent will help you with the negotiating. Once you have agreed on a price, you will pay a deposit called earnest money. This is a sign of good faith to the Seller and goes into a trust account with the title company for you to use at the Closing.
Step 6: Inspections
Once you have signed a purchase contract, you will need to pay a small fee for an Option Period of typically 7 to 12 days. During this period, you may void the contract for any reason. However, this time is for you to complete any inspections you desire on your potential new home. A general home inspection and a termite inspection are most common, but you may want or need an insurance, roof, septic, water well or other specific inspections depending on the home. The reports may show the need for repairs to the property that you will need to discuss with your agent as to your options. The lender will also send an appraiser to inspect the property. This is primarily to determine if there is sufficient value for the loan amount requested but with VA, FHA, or USDA loan the appraiser may require repairs to the property. Also, your agent should discuss available home warranties which will cover repairs to the house systems if they arise after you have closed the purchase.
Step 7: Avoiding Delays
Most home purchases with financing have a Closing Date scheduled for 30 to 45 days after the contract is signed. This allows time for inspections, appraisals, title work and loan processing. And with occupied homes, reasonable time for a Seller to pack and move. Remember the Closing Date was negotiated to be convenient for both you and the Seller. So, to stay on schedule, you need to be in contact with your agent and lender and be available to promptly provide them with anything they request. Also, you need to make NO changes in your employment or finances. A new job or major purchase such as a car or furniture may affect you qualifying for the home loan.
Step 8: Closing Day, Time to Move!
When your Closing Day arrives, you will finalize the purchase of your new home. Your agent will recommend you do a final walk through of the house before you head to the title company for the Closing. The title company, which has reviewed the property title and survey, prepared the Closing documents, and will insure the title, will have all the documents for you to sign. At that time, you will pay any remaining funds to complete the purchase. Once the Seller has signed their documents and your loan is funded, you will be given keys and allowed to take possession of your new home. In the days leading up to closing you should call to transfer utility service to your name, make moving arrangements and start packing. Now it is time to move! Whether you have a lot of friends willing to help you move or are using a moving company, you are done with the home buying process! Just start unpacking and start enjoying your home! Buying a home does not have to be a hassle if you are prepared and you know what to do and when to do it. Choose an experienced home loan lender and a friendly, knowledgeable real estate agent. They are the key to helping you have a smooth home buying experience!
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