10 Steps to Buying a Home

Buying A New HomeThese days, buying a home may not be as easy as 1, 2, 3-but it just might be as easy as 1-10.  And while a variety of factors can affect the ease  and timing of your transaction distressed properties or special mortgage programs, for instance – a few basic steps are universal for most home buyers during the initial stages of a purchase.

1.  Determine Your  Readiness

If you’re reading this, it’s likely that you’ve already tackled the fIrst step of deciding whether purchasing is a good option for your finances and your family. Obviously, your current financial situation will be a major factor in this decision. Understanding the costs of home buying  and home ownership are vital steps in determining whether you’re ready to “take the plunge.” Factors that determine your financial readiness include your current income, savings, fIxed expenses,and debts.

2.  Become Optimal Mortgage Candidates

With lender requirements stricter than ever,you’ll need to make sure your credit and finances are in excellent condition. Try to pay off or pay down outstanding balances on credit cards, car loans, etc. This will help improve your income-to-debt ratio, which will in turn improve your credit score.  A credit score higher than 700 will help you get the best rates.

3.  Get a pre-approval letter

Getting pre-approved for a mortgage means that a loan officer has reviewed your finances and credit report and believes you qualify for a specific loan amount for one or more mortgage programs. The lender will then offer you a pre-approval letter, which will be a testament to your buying power when you are ready to make an offer on a home.

4.  Determine Your  Budget

Your pre-approval letter will tell you how much the bank is willing to lend you based on your credit,income, and other factors,but how much you can really afford is a personal decision. The bank will take your fixed expenses into consideration when determining your pre-approval amount, but you will need to determine what you’re comfortable spending each month.

5. Find A Real Estate Agent

With  access to multiple listing  services and insight into  the market,  a real estate  agent  can help  you find the home you’re  looking for as well as facilitate the negotiating and closing process.  While  you don’t have to use an agent  to purchase  a home, it can make the entire process much easier for first­-time homebuyers.

6.  Select A Property

Narrow available  properties by determining what you really want in a home.  Your agent  will can help arrange  home  viewings for properties that  suit your preferences. Once you’ve selected the right home for you and your family, it’s time to make an offer and close the transaction.

7.  Make An Offer

Placing an offer can be a delicate process. The current market condition, time  of year, work needed on the home, and the length of time  the home  has been  on the market  can all affect your offer- not to mention your own budget. The price is not the only factor within an offer, either; you can also negotiate closing costs, necessary repairs, etc.

8.  Inspect The Home

Once your offer is accepted, it’s customary to schedule a buyer’s home inspection. This is when you have the opportunity to get a professional opinion on the condition of the home and determine any red flags (like damage, pests, structural issues, etc.).

9.  Sign A Purchase Agreement

The sales contract, or purchase agreement, will outline the specific directions of the transaction. This contract will outline the details of the sale, negotiated repairs to be made prior to close, fixtures sold with the house,  certain disclosures on the property, etc. This, along with a payment of earnest  money,  will be held  by your  attorney or escrow officer, depending on your geographic customs.

10.  Close The Transaction

The process of closing on a new home can require several weeks (or longer) and many steps. During the escrow period, you will work with your lender to secure your mortgage. This process will involve gathering a wealth of financial  paperwork as well  as arranging a lender’s appraisal of the property. During the closing, your lender may require you to purchase a policy of homeowners insurance, and you will have the option to purchase an owner’s policy of title insurance. When the requirements of your purchase agreement have been  fulfilled and your mortgage has been approved, you will be given a final walk-through of the property to determine that all repairs were made as negotiated. On the closing date, you will sign your mortgage documents and receive the keys to your new home.