Home Buyer's Guide
Buying a home of your own is an important goal to achieve. There are many steps along the way to becoming a homeowner, many decisions for you to make and many factors to consider when contemplating home ownership. While there are many benefits to owning a home, there are downsides and responsibilities that also come with the territory.
Home owners experience the freedom of having a place of their own and the benefits of investment where equity potentially increases each year. Traditionally homes have appreciated in value, making the property worth more than when they were purchased.
Homeownership also means that you are responsible for all maintenance and repairs. In addition to paying the mortgage every month there are other expenses to keep in mind when owning a home like utilities, property taxes and home owners insurance.
Step 1: Know how much you can afford
After you decide to pursue home ownership, start assessing your finances and determine how much you can afford per month. Begin analyzing your monthly expenses. It may be necessary to cut back on some expenditure in order to afford a mortgage payment and other costs of owning a home. In addition learn how much you can afford for a down payment as you might have read in our prior articles, has a large impact on the amount of your monthly mortgage payment.(If you are interested in down payment assistance or want to learn more about qualifying for down payment assistance click here).
Step 2: Check your credit
Once you apply for a mortgage, Lenders will look up how much you can afford and your credit history to determine if you qualify for the loan. You should obtain a copy of your credit report or email one of the three major credit reporting bureaus for a copy of your credit report.
Step 3: Mortgage Pre-Qualification
Once you determine how much you can spend each month on your new home, you can determine the maximum affordable sales price. This will depend upon your income and amount of the down payment. The prequalification will give you an estimate of the amount of money you need to borrow from a lender to purchase a home.
Step 4: Mortgage Pre-Approval
Mortgage pre-approval is not the same as pre-qualification. Pre-approval means you have completed the application process and have a written commitment from the lender to give you a mortgage loan for a certain amount. This gives you an advantage when dealing with the seller because you have your finances already in place which typically speeds up the transaction. The home always remains under contract until the buyer obtains finances. (Click here to learn more about Mortgages).
Step 5: Find an Agent
Today it is common for a home buyer to hire a real estate agent to find a home. Your agent is answerable to you and is obligated to follow your instructions. Real estate agents receive a portion of the sales price through commission so the goal will be nothing more than to sell you the home of your choice in a reasonable time frame. (Click here to learn more on Realtor Assistance in buying a home).
Step 6: Selecting a Home
Once you have selected a real estate agent to help you in your search, share your requirements and wish list with your agent. The agent will then show you homes that seem to fit your needs and wants.
Step 7: Make an offer
A purchase offer is a detailed written document that lists the price, terms and conditions under which the buyer is willing to purchase a property. Then your offer may be accepted, rejected or counter offered by the seller. A counter offer consists of any changes of terms or price to your offer. The proposals will remain under contract until both parties agree to the terms and provide their signatures.
Step 8: Hiring a Lawyer
Many home buyers choose to be represented by an attorney although you are not required to have an attorney to buy a home. An attorney will be your advocate in the real estate closing settlement and can provide valuable assistance and legal advice. (Click here to learn more about hiring a real estate attorney).
Step 9: The inspection
A professional home inspection should be completed prior to the closing. Your purchase contract should contain a clause that allows you to renegotiate with the seller or decide not to purchase the home if the home inspection reveals serious problems with the property. It is important be present during the home inspection!!!
The final steps prior to closing
- Title search
- Title insurance
- Homeowners insurance
- Flood search
- Termite inspection
- Appraisal report
The final walk through and closing
The closing is a meeting where you will complete the final paper work to purchase the home from the seller, sign mortgage documents and receive the deed. The owner will give you a title to the house in the form of a deed. Then last but not least the title and mortgage will be recorded at the local county clerk’s office. (Click here to learn more about Real estate legal documents).