Buying a Home? Here are a few tips to get you started.
Check Your Credit Score
Lenders base your mortgage qualification on a variety of factors, including your income and assets, your debt-to-income ratio, your pattern of savings and your job stability. But the most important factor is your credit score, because this determines your interest rate.
Set Your Housing Budget
Financial experts recommend that homeowners spend a maximum of 30% of their gross monthly income on principal, interest, and taxes. Don’t forget to budget about 1% of the home price for condo or homeowners association fees and maintenance costs.
Meet with a Lender
Once you find a house you like, get pre-qualified for a mortgage loan so you know the price range you can afford. Make sure you ask your lender about your variety of loan options and get an idea of how much cash you will need for a down payment and closing costs.
Find a Reputable Realtor
All buyers should have a realtor to assist with the search process and represent their interests during negotiations. If you don’t know who to work with, ask your lender or friends to refer an agent. A good real estate agent can not only save you time and money, but also a whole lot of headaches.
Narrow your Priorities and Start your Search
Decide whether it is more important to you to live in a particular type of home or in a particular neighborhood. If you cannot find or afford everything you want, you may need to make some compromises. Make a list and discuss your top priorities with your realtor.
Make an Offer
Once you find your perfect home, it’s time to make an offer. Keep in mind that some sellers are willing to negotiate and others are not. A trustworthy realtor can walk you through the process to make sure you are dealt with fairly and will present your offer to the seller, who will accept, counter or reject it. Once the price is settled, you and the seller sign a Purchase Agreement, defining the terms of the sale.
Have a Home Inspection
Never buy a home without having it inspected. An inspection looks for serious flaws in the home, but can also tell you what to expect in terms of repairing or replacing systems and appliances as an owner.
Have the Home Appraised
The appraisal, which is required by any mortgage lender, is a formal written estimate of the home’s current market value. If your home does not appraise for the amount you offer then you will need to renegotiate your contract.
Obtain title insurance (where applicable)
This guarantees that the property you are purchasing is free of liens and insures against any losses to the property that results in the title or deed.
Close on the property. Congratulations! You are now a homeowner!