Buying a house can become very confusing, especially when you have never done it before. We are going to take a look at the steps to buying a house that you need to consider before you put down a home deposit. One of the most critical parts of purchasing a home for the first time is preparation. Being mentally and financially ready is a vital part of buying your first property.
Have a look at the handy checklist on what to do before buying a home. Along with the information found below, you'll be in a much better position to becoming a homeowner. Avoiding common mistakes will be a vital key to purchasing your first property. Do these things correctly and you'll be well on your way to homeownership.
1. Do Your Homework
At the earliest opportunity, you should begin your search. This will provide you with a better idea of the market in the area you are looking to buy in and help you understand where it is heading. When it comes time to make an offer, you will be better positioned to understand the right amount to bid.
Take a look at some of the most frequently asked homebuyer questions to help prepare for jumping into the real estate market.
2. What Much Can You Afford?
You will likely need to find a substantial down payment when buying a house, so you need to know what you can afford. This way, you will avoid wasting your time looking at properties that are out of your reach.
It is recommended that you don't look beyond properties, which cost 3 to 5 times your income. This should make a 20 percent down payment more easily achievable, and leave you in a better position to cover all the other costs involved in home buying.
It will be smart to take care of any credit issues before moving forward. Are there any mistakes in your credit report? Do you have any outstanding debts that should be taken care of? If you need a little bump in your credit before buying a home check out Credit Karma. The site offers handle tools to put you in a better place financially.
3. Loan Approval
To better understand what you can afford, you should make sure to get preapproved for a loan. Preapproved is better than prequalified since there is less of a chance of you running into issues when you need the money from the lender.
Pre-qualification for a loan will mean that the lender will look into your financial situation to let you know how much they can lend. Preapproval goes deeper to check that you meet the requirements for the loan amount you want. With a preapproval, the lender will also check your credit, verify your employment, as well as, your income.
Either situation will give you a better understanding of the value of the home you can afford and makes sure you aren't wasting your time. There are quite a few first-time buyer mortgage programs to choose from. Understanding which is best for your financial situation will be a critical aspect of your home purchase. See an excellent review at Maximum Real Estate Exposure on low and no down payment loan options.
4. Get The Right Help
The real estate agent you choose can make a big difference in how successful you are when purchasing a home. Finding someone who is experienced in the local market can give you an unenviable advantage. They will aid you in the buying process, using their years of experience in the area to get you a better deal.
There are numerous reasons to have a buyer's agent working in your best interests. Best of all, as a buyer, it isn't going to cost you anything to get this assistance. Going to the listing agent isn't smart and could cost you a lot of money.
5. Finding A Home You Like
When buying a house, it can be helpful to make some notes and take a few pictures. Since you will likely be viewing many homes, it is an excellent idea to make some record of the houses you visit to help you remember what you liked.
When you are shown a home, be sure to check the essential things in the house function, like lighting, the heating system, as well as the plumbing and water. Is the water pressure acceptable? How old is the heating system? Are there any stains of the ceiling from leaking plumbing?
It isn't a bad idea to have a look around the neighborhood as well. Is this really the sort of place you want to live in? Remember that the type of street you live on will impact the long-term appreciation of the property.
Once you have found somewhere which meets your needs, ask the real estate agent for advice on how much to offer. When your offer is accepted, you may need to provide an earnest deposit and move onto the more serious steps to buying a home.
6. Home Inspections
A home inspection is vital to make sure you are committing to a property that isn't going to cause you massive problems after you've closed on the deal. A professional home inspector will look for issues with the structure and many other areas that could lead to problems.
The offer you make will be contingent on the results of the home inspection. If or when issues are found, you can renegotiate the price or have the seller fix the problems. If you aren't happy at this stage, the contract should allow you to exit the deal without losing your earnest money deposit.
You will need to pay careful attention to some of the more common home inspection deal breakers. These are the type of problems that can cause home sales to fall apart due to either their cost to remedy or the seller's unwillingness to fix the issues.
Not getting stuck with a lemon will be an essential step in successfully buying a home.
7. Getting The Right Loan
A critical step in the home buying process will be getting the right mortgage. There are many different types of loans available from banks and other lenders. You should be able to find something which meets your particular financial circumstances. You may need fixed low payments or prefer a smaller down payment, whatever the situation, make sure you get the most suitable deal from the lender.
It will be essential to ask the lender lots of questions. Here are some of the most frequently asked mortgage questions home buyers ask. The answers you get will help shape in what direction to go in. While the preapproval mentioned previously is vital, so is the type of loan you choose as well.
8. Home Appraisal
A lender will want to make sure that they are lending you money on a home that is worth the loan amount. An independent appraiser is used to make sure that you are paying a fair price for the home. The appraiser will be sent to the property by the financial institution doing your loan.
The appraiser will look over comparable sales data to make sure you are paying fair market value.
9. Staying Organized
With a big purchase like a home, there is going to be a lot of documents produced by the various parties. The title company should deal with most of the paperwork to guarantee everything is above board. It will also be advisable to have a local real estate attorney who can help negotiate the purchase and sale agreement.
The attorney may also assist in making sure a proper title search is done to make sure there are no outstanding liens on the property. Your attorney will also attend the closing to make sure all of the paperwork is handled correctly. Getting title insurance to protect your equity in the future is highly advisable.
10. Final Walk-Through
The final walk-through will be your last opportunity to see the house before you close. You will want to make one last stop to make sure everything is in order. The objective of a final walk-through is to make sure the home is in the same condition as when you created your initial offer.
It will be advisable to pay attention to a few things, including the general condition, as well as anything that was agreed to in the contract. For instance, did the seller agree to leave behind some furniture or the washer and dryer?
You should check the water, heat, and electrical systems. Look for any damage that may have taken place by the seller's movers. When you find something that needs correcting, it will need to be worked out with the seller's side.
Sometimes issues can't be resolved on the spot. In situations like these, it is typical for an escrow holdback to be done to ensure the problem is dealt with.
11. The Moving Process
One of the worst parts of buying a home is the actual move. You've probably spent a grueling amount of hours either packing up a former home or apartment. If you are smart, you'll consider hiring a professional mover, as they will make things so much easier than trying to do it on your own.
If you feel the moving company has done an outstanding job, don't forget to tip. Many folks ask if they should tip a mover and the answer is yes, as long as they do an excellent job.
The culmination of all this is when you finally sign on the dotted line and complete the buying process. It may take a few days for the lender to supply the funds to the seller, but once that has happened, you are the new owner.
Typically your deed will be recorded at the local registry of deeds. Once the deed is registered, you have now become a proud first-time homebuyer. Be sure to remember to change your address so you receive all of your essential mail.
Hopefully, you have enjoyed these twelve steps to buying your first house. One of the most critical aspects of buying your first property is due diligence. Never be afraid to ask questions and lean on your team of pros for any help you may need during the process.