A Step-by-Step Guide to Buying a House
If you’re thinking about buying a house, you’re probably feeling overwhelmed and excited. Whether it’s your first home or your fifth, there are tons of information out there that can seem daunting and confusing. Let’s take a look at some easy-to-follow advice to guide you through the process.
Step 1: Determine Your Monthly Budget
Before you even start looking for a house, figure out exactly how much money you can spend each month on housing costs once your mortgage is paid. Keep in mind that most lenders will require borrowers to pay for private mortgage insurance (PMI) if their down payment is less than 20 percent of the home price.
You also need to consider property taxes and homeowners insurance as part of this number. When determining what type of home to buy, make sure it falls within your budget.
Step 2: Look for a Property That Fits Your Needs and Preferences
Once you already have your budget, you can begin looking for properties that meet your needs and preferences.
First, define what you’re looking for. Do you need to be close to work? Hate being cold? Asking yourself questions about what you value in a home will help narrow down the search.
In addition, take your time and go through lots of listings, so you can get a sense of what’s out there. It might even be helpful to create a spreadsheet or document that contains all properties that fit your criteria so you have them for reference when looking at homes with real estate agents.
Once you begin looking at homes, focus on finding three possibilities that best match your needs and budget. Look for comparable homes in the area via online sources or community resources, so it’ll give you an idea of how much similar homes are worth.
Step 3: Shop Around for Lenders and Get Pre-Approved for a Mortgage
Once you’ve found homes that fit your needs and budget, it’s time to find lenders and get pre-approved. You might be tempted to wait until you’ve found the perfect house to apply to, but getting pre-approved will help speed up the process when looking.
Further, getting pre-approved will allow you to understand better what mortgages are out there and which offer the best interest rates. This is a great way to ensure that you don’t miss an opportunity because it’s not within your budget.
Before choosing a lender, make sure they are the best mortgage company for first-time homebuyers or refinancing. You might also want someone who offers different loan programs and interest rates.
Be sure they can give you advice on down payment options and how much debt you can afford based on your income and expenses. Ask about closing costs—including fees that could change from state to state—and if theirs include title insurance during the process.
Step 4: Make an Offer
Once you’ve found a home that fits your criteria, it’s time to make an offer. This is where the pre-approval comes in handy.
You don’t want to be at full price or think you can afford more than your budget allows just because something seems attractive. Remember that any house requires repairs, so there might be hidden fees along with utilities and maintenance costs down the line.
On the other hand, if the asking price is lower than what you wanted to spend, make sure you know how much it will take to bring up the house’s value before closing. That way, potential costs won’t come as a shock during inspection processes. If they become too high, you’ll have enough time to ask the seller to make the required changes or walk away.
Step 5: Negotiate and Get the Best Price Possible
Before making an offer, make sure you research comparable properties in the neighborhood. That way, you know exactly how much the home is worth. You’ll also have a sense of what repairs need to be made before closing day.
If your agent tells you that they can’t budge on their asking price, it’s a good idea to ask if they’ve considered selling in parts—like getting rid of a few items in the living room to lower costs when dealing. This might be a better option for some sellers looking for fast sales without too many strings attached.
After you’ve made an offer, the final price of your house depends on negotiations between both parties. The seller has a few days to consider before approving it and making any necessary changes.
If they approve it, work out closing costs—including transfer tax and fees that might come up during inspection processes—and then signing day will finally arrive!
Now that you know how much work goes into buying a home, hopefully, you’ll be better prepared when looking for your dream property.