If you’re ready to settle down and buy a home, you may be so excited by house-hunting to think clearly about the entire process. Instead of being overwhelmed and confused, use this guide to walk through the 6 steps of buying a home.
1. Check Your Credit Score
Your pre-approval for a mortgage as well as your interest rate are tied to your credit score. Before you buy your home, you’ll want to obtain copies of the three credit reports and go through them to look for any wrong information.
Correct any mistakes you find and then apply for a loan for the best odds of getting the loan and a rate you can afford. It can take time to dispute erroneous items on your report so start this process early.
2. Choose A Real Estate Agent
When buying a home, it’s important to get a buyers agent to represent you. This realtor will have your best interests at heart and can not only show you houses, but present offers and give advice on what’s a good deal.
You’ll want to work with someone that pays attention to your needs, has time to work with you and knows the area you’re looking in. If you’re not comfortable with your agent, keep shopping around until you find someone you can work with.
3. Get Pre-Approved For A Loan
Shop for a mortgage lender and get pre-approved for a mortgage. This way you’ll know how much of a house you can afford and about how much your monthly payment will be.
Going into the buying process with a pre-approval makes you a more attractive buyer to home sellers. If you’re getting offers from multiple lenders, you’ll want to make all of your applications at once.
Every time a lender checks your score it’s a hard inquiry and causes a dip in your score. Fortunately, all inquiries for mortgages made within 45 days are treated as just 1 inquiry which minimizes the impact to your score.
You’ll probably get a pre-qualification within minutes. When you go to make an offer, the buyer will know you’re serious and that you have a good chance of getting the necessary financing to complete the purchase.
4. Find A Home
Finally you’re ready for the fun part of house hunting – looking at homes. Get your realtor ready and take a look at all of the listings that meet your criteria. During your first few outings you may just get familiar with different neighborhoods and figure out what you don’t want in a home, but eventually you’ll find the perfect place to settle down and call your own.
If you have a deadline in mind, make sure you give yourself plenty of time to not only find a house, but to also close on it. In competitive markets, it can often take much longer to find a home you love and that you can secure before other buyers.
5. Make An Offer
Once you’ve found a house you love, it’s time to make an offer. Your agent will help you make an appropriate offer with the right contingencies to protect yourself. In competitive markets, it’s not unusual for sellers to reject contingencies, so be prepared to compete with other buyers and to make changes to your original offer.
6. Close The Deal
Once the offer is accepted, you’ll be closing on your new home in a bit over a month. During this time you’ll have a home inspection, an appraisal, a title search and your loan will be prepared. You’ll put a down payment down and provide money for any closing costs you’re responsible for. Finally, you’ll review and sign many documents and you’ll be handed the keys to your brand new home.