Buying a house is one of the biggest investments you can make in a lifetime, and the financial obligations are intense. Buyer’s remorse is a sad but true true reaction when someone realizes a little too late that they’ve bought the wrong house. Here are six simple steps to buying a home that will help you go in informed, educated, and empowered for home ownership.
1. Prepare your credit report and your savings account. Gone are the days when unqualified buyers can get a loan for a home. Now, your credit must be crystal clear and you have to have some cash on hand to back your commitment. Lenders are going to evaluate (quite critically) your credit score and employment history, so don’t change jobs or make any major purchases in the time leading up to your home buying experience. Know that if you are approved, you’re still going to have to make a good-faith deposit with your offer to the seller, an average of twenty percent of the home’s value as a down payment, and closing costs, which can be estimated at about 2-8 percent of the value of the property you purchase. There are some programs available that can lower or eliminate your down-payment, but those “savings” show up in your monthly mortgage payment and the duration of your loan.
2. Get pre-approved. It’s a horrible feeling to fall in love with a property, and then find out you’re not qualified to make the purchase. Or, you lose out on your offer because a competing offer did have pre-approval. Pre-approval accomplishes much more than the comfort of knowing you’re qualified to buy. Pre-approval of your home mortgage loan lets you know exactly what your home-buying budget is. Watch for interest rates, don’t be afraid to shop lenders for the best deal, and know that you are not obligated to accept the full amount of the loan for which you’re approved. Pre-approval also sends a statement to your real estate agent, and to sellers.
3. Once you have your credit prepared, savings on hand, and pre-approval for your loan, it’s time to find a professional real estate agent you can trust. Interview agents until you find one with whom you can comfortably communicate, who is an expert in the types of property you’d like to buy, and who has extensive knowledge about the neighborhoods in which you’d like to live. A good starting point, if you don’t already have an agent, is to ask friends, family members, and associates for referrals. It can be comforting to know that someone with whom you’re close had a good experience with the real estate agent they’re recommending. Have your wish list and deal-breaker items ready, but be realistic and be prepared to compromise. It is common for a first-time buyer’s wish list to surpass the realistic budget.
4. Enjoy the fun part, shopping, but beware of well-staged houses. Staging means the seller went to extensive lengths to make the house attractive, and sometimes “pretty” can be deceiving. When you find a house you think you might make an offer on, turn on every faucet, flush every toilet; look under every sink to make sure the area is dry and free of mold. Flip the light switches. You want to make sure there are no plumbing or electrical problems with the property. You should also look over the structure. Check out the ceilings, look at the floors, in the nooks and crannies. Look for cracks, peeling paint, splitting wood, or other indicators that the property may be hiding major problems. And when you’re ready, make an offer with your real estate agent’s guidance.
5. When your offer is accepted, the house you’re buying will undergo an appraisal to make sure it’s worth what you’re borrowing, and an inspection to make sure the house is in good condition.
6. When the appraisal and inspection are finished, you’ll enter the closing process. This is where the title is transferred, the professionals involved in the transaction receive payment (such as appraiser, inspector, real estate agents, etc), and the keys are handed over from the seller to you, the new homeowner.
Congratulations on your decision to buy a home. Give Real Property Solutions a call today at 504-237-2942 to discuss how we can light the way!