One of the most important transactions you will make in your life is the purchase of a home. Purchasing a home is an exciting, yet daunting, task. Ensuring you are prepared for the home-buying steps can greatly improve the experience for everyone involved. By following these six steps, you can rest assured that you have your bases covered.
Know Your Credit Score
Your credit score can have a significant impact on your ability to get a traditional home loan, or mortgage. All banks will take your credit score into consideration when determining an interest rate for your home loan. The lower your interest rate is, the lower your monthly payments will be, and the less you will pay to the bank as a fee for borrowing their money. Additionally, a higher credit score can sometimes reduce the amount of down payment required by the bank.
There are three main credit reporting bureaus to watch: Equifax, Experian and TransUnion. You are entitled to one free credit report from each of these credit reporting bureaus per year.
The Importance of Saving Money
While many banks are relaxing some of the restrictions on home loans, down payments, closing costs, and home repairs are an inevitable part of the home-buying experience. As a rule of thumb, have 5-10% of the cost of the house set aside for a down payment. Ask your realtor to estimate the closing costs to ensure you have those funds set aside as well, although many home buyers opt to lump the closing costs into the home loan. This is not ideal as you will be paying interest on the closing costs, but is usually accepted by banks.
Don’t think you can put your pocket book away just yet. What are you doing to do if your water heater goes out, air conditioner stops cooling, or your washer and dryer stops washing and drying? Have financial reserves built up to cover crisis situations. Despite our best efforts to prevent things from breaking, it will certainly happen and all you can do is to prepare yourself financially.
Find the Right Real Estate Agent
Boost your home-buying experience even further by making sure you choose the right real estate agent. Interview 2-4 real estate agents before choosing the right one for you. Make sure their reputation is good and their personality fits with yours before moving forward.
Get Pre-Approved for a Home Mortgage Loan
A pre-approval is an important step after choosing the right real estate agent. Before showing you a home, both the buying and selling real estate agents will want to make sure you have sufficient funds to move forward. Getting a pre-approval is a simple process. Call your preferred bank and set up an appointment for a pre-approval. They will request that you provide: personal information, income information, and asset information. The underwriters will review your information and provide you with a pre-approval for the maximum amount the bank feels comfortable lending you.
Placing the Right Offer
When you’re ready to place your offer, keep in mind that you want to get a good deal, but you also don’t want to offend the sellers by offering too little. Be realistic about what you’re willing to pay for the home. Try not to get caught up in the excitement of buying a new home and over-spend and always make sure you’re prepared for the sellers to accept your offer.
What Happens After Offer Is Accepted?
Congratulations! Your offer has been accepted, but it’s not the end of the road yet. This is the time when home inspections happen and the bank prepares all your paperwork. Your realtor will have recommendations on who to have perform your home inspection, as well as any additional inspections such as termites or radon. The costs of inspections are paid out-pf-pocket and are not part of the home loan. The bank will take approximately 30-45 days, on average, to prepare all the necessary paperwork for you to sign. Once the paperwork is signed, you officially own a new home!
Your real estate agent is the best source of information about the local community and real estate topics. Give Evelyn Santiago-Blanks a call today at 909-772-8561 to learn more about local areas, discuss selling a house, or tour available homes for sale.