A lot goes into buying a home. Between inspections, mortgage types, and terminology, buying a house seems like a foreign language. The whole process is time-consuming and can be a pain in the ass. With all of that, it can be hard to know where to begin. On top of that, there are many myths regarding buying a home, which can make the whole process more confusing.
1. Find out what you can afford.
You have to figure out how much of a mortgage you can be approved for. Then, you should find a bank or credit union that would be willing to lend you the money for your mortgage. Finding out how much you can get approved will tell you the price range you should stick to. Many banks and credit unions will tell you if you need a down payment and list your interest rate and note length.
When trying to get a pre-approval (the loan is considered a pre-approval until the actual sale goes through), avoid any unnecessary transactions on your credit. It’s crucial to avoid large purchases on your credit card or buying a vehicle with a car note. Multiple inquiries on your credit will cause it to drop and reduce your chances of being approved for a mortgage. The goal is to have no inquiries or drastic drops in credit from the time you apply for the mortgage until closing on the house.
Find a bank or credit union that you would like to work with, then submit a mortgage application. Generally, credit unions will give you a better interest rate and higher chances for approval. Once they process it, they will inform you how much money they could potentially approve you for. After you have the pre-approval amount, the fun part starts.
2. Decide whether you want to use a realtor.
The majority of the time, you will want a realtor when purchasing a home. Realtors will walk you through the home buying process and help you find the perfect home. If you don’t want to use a realtor, the process of buying a home will be more challenging but not impossible. Choosing not to use a realtor saves you realtor service fees, but every part of the process falls on you.
It’s important to stay realistic when purchasing a home. Once you have your budget, a realtor will help you make sure the house you choose is within budget. You may want a 5-bedroom 3-bath home with a pool and all the lavish amenities, but realistically, you may only get a 2-bedroom 1-bath basic house with a few amenities. At the end of the day, realistic views on home buying save you future disappointment.
3. Once you have found a home that fits your budget and needs, you have to submit an offer to the homeowners.
This offer is generally within the ballpark of what the homeowners are requesting. It includes information such as who is paying closing costs, realtor fees, inspection costs, repairs needed from the inspection, and similar. Once this is all decided, the homeowners will either accept, decline, or send a counteroffer back to you. If they accept your offer, the next part of the home buying process begins. A declined offer means that the homeowners either agreed to another offer already or chose not to sell to you. If that happens, you can put in another, more appealing offer or opt to find another house. A counteroffer means that the seller is extremely interested in your offer, and you can negotiate the terms of the deal. Try to stay flexible during negotiations to create the best deal.
4. The next step mostly includes inspections and appraisals.
These inspections ensure that you are getting what you’re paying for and that there are no major issues with the house. Every credit union and bank will require an inspection and appraisal. The reason behind it is simple: Until the house is paid off, it is their investment. No financing company wants to have a bad investment. Occasionally, inspectors find issues with the house that require repair. These issues need to be fixed before the final part of the home buying process begins.
5. The final part of the home-buying process is the final closing and title transfer.
Essentially, this involves all the paperwork that goes into buying a house. Fun fact: After all the signing, you’ll feel as if your hand is going to fall off. Once all that is done, the house becomes your responsibility legally, and so does paying a mortgage.
As far as buying a house, this is just a quick breakdown of the procedure. This process is different for everyone and every situation. Depending on the sale type, location, mortgage type, and many other factors, your home-buying process could look entirely different. That’s why it’s beneficial to have a realtor to walk you through the process. If you don’t have a realtor, whoever you are using for your mortgage company can walk you through the process as well. Just keep asking questions, and eventually, you will reach your final goal!