Interest rates are falling again and those who have been thinking about buying a home are beginning to think that it is more obtainable then ever before and they are right. As they begin to investigate the feasibility of purchasing a home these steps and tips may be useful.
Steps to Becoming a Homeowner
Buying a home is one of life’s major milestones. It’s an incredibly exciting time, but there is a lot to think about.
Here are 6 steps to get you started.
- Define Your Needs Versus Wants. For example: How many bedrooms? Do you want a yard, acreage or no yard? Do you work from home and need an office or a den? What neighborhood features are important?
- Realistically Define a Budget. Include the standard budget items, including available funds for a down payment, repairs (fixer-upper or move-in ready?).
- Get Pre-approved by a Lender.
- Shop rates, fees, closing costs, etc.
- Determine your spending limit with a lending officer.
- Find out how long it will take to close.
- Get an approval letter. A real estate agent may require it before showing you homes on the market.
Your financial information will be reviewed, including debt, income and assets, to get a broad estimation of the amount you qualify for, and possible payment amounts. Typically, a credit report is not pulled for pre-qualification, but this is a good time to make sure there are no surprises on your credit report.
A pre-approval is a deeper dive into your finances and credit score that requires an official mortgage application. You will receive a written document that outlines the loan amount that you qualify for.
By the way, with the current and falling interest rates, most people are pleasantly surprised by how much house they can afford. It’s always worth checking.
Conduct a Web Search to Find Out What’s on the Market.
- Look for homes to match your budget.
- Find homes that match your criteria.
Identify and Select a Real Estate Agent.
- Do a web search of local real estate agents.
- Verify their years of experience and certifications/education.
- Match their recent sales and listings with the type of home you want to buy.
Do Your Homework With Your Lender and Buyers Agent.
Be prepared to:
- Know what you need versus what you want (may need to negotiate with yourself and others).
- Know your budget and stick to it.
- Make sure the lender and real estate agent are ready and able to work for you to make an offer work.
- Review the home inspection carefully and know what you can and won’t accept.
- Be prepared to walk following the home inspection or the negotiation.
- Be realistic but don’t concede on your needs.
Five Helpful Hints
1: Make it fun – spend a weekend visiting open houses to take notes, including your likes and dislikes.
2: Developing a realistic budget is key to avoiding stress and buyer’s remorse. Does your real estate agent clearly know your price range? Resist viewing homes outside your budget.
3: Getting pre-qualified or pre-approved is probably one of the most important and initial steps you should take in the home buying process. Knowing your price range ahead of time may help you avoid disappointment later.
4: Picking the right real estate agent or a mortgage professional is extremely important. Be patient and interview a couple of real estate agents before making a decision. Recommendations from family, friends and co-workers can help narrow the field. Remember in most cases the buyer does not pay any fees to the real estate agent. They can get you through a lot of hoops that you may not be prepared for or expect.
5: If you are looking to upgrade or downgrade you home situation, all these rules still apply with one addition. Get your house listed before you get too far along in this process. Most sellers will not accept your offer if it is contingent on you selling your home and it’s not listed. They are more likely to accept it if it is listed. And will more than likely accept if your home is under contract.
I’ve known too many people that have found the home of their dreams only to have their hopes dashed because they have difficulty selling their home.
I really enjoy helping people improve their housing situations. I have met so many wonderful individuals and have tried to really make them my friends. It has been very rewarding.
Please feel free to pass these tips along to those you know that may be looking to buy or sell a home along with my information. I’d be happy to help them.