Buying a home can be a daunting task, especially for first-time buyers. The challenge is to determine the best price range for a home that meets your most-preferred specifications. To help demystify the home-buying process and ensure maximum benefit, some essential tips would come in handy.
Here are key factors a home buyer should know:
- Know Your Credit Score
Before shopping for a home, it is important to have an estimate of how much a lender would be willing to provide in the form of a home loan. To stand eligible for a loan, your personal finances should be in order. You ought to have a good credit history, including prompt payment of previous bills and other outstanding loans. Your Debt-to-Income ratio should also be less than 43%, which boils down to your current outstanding debt, monthly income, and for how long one has been employed (if applicable).
- The Importance of Saving Money
One of the most important factors when applying for a mortgage is whether there will be any savings left. A mortgage comes with other notable upfront costs such as down payment and closing costs. Even if the mortgage looks manageable, savings should be relatively safe, accessible and have a return on investment. A high-yield savings account would be the ideal option to keep the money in liquid form. Still, long-term borrowers may opt for a certificate of deposit in a bank.
- Choosing the Right Real Estate Agent
For a smooth sail in a home-buying process, an experienced real estate agent comes in handy. They will specifically help you locate the most suitable home within the best price range and arrange for home viewing before the actual purchase. Further, a real estate agent can assist in negotiating the process of purchase, making an offer, loan acquisition, and filling in the necessary paperwork. Besides charging a commission from the seller’s proceeds, they will go overboard to protect the buyer against all possible pitfalls within the process.
- Get a Mortgage Pre-Approval
Prior to placing a request for a home loan, one should get a mortgage pre-approval. This typically involves applying for a mortgage and completing all the necessary paperwork. The paperwork may demand financial information such as credit scores, employment information, and debt-to-income ratio. Depending on the current real estate market rates, lenders will generally limit the housing expenses on home loans to 30% of the borrower’s gross monthly income. This means that lenders can only pre-approve a specific borrower for a specified amount. However, despite having been pre-approved, loan limits may still drop abruptly if the credit score is altered by anything, including purchasing a car.
- Create Your Wish List
While several options exist for residential property, every homebuyer would naturally have a wish list for a desired home. Your dream house might be a duplex, a Condo, a housing co-operative, a single-family home or a multi-family home with numerous units. Depending on one’s goals, each option comes with its benefits and disadvantages–a reason to be careful on the type that best suits your desired goal. Thus, special consideration should thus be given to the size, neighborhood, layout, and basic amenities such as the kitchen, bathroom, and all other necessary appliances.
What to Expect During Your Home Search
The home search is quite a tedious process with offers and counter offers. One should however get through the process easily by using a basic progression package:
- Finding a home
Buyers may take advantage of all the available options including online listings, using real estate agents, driving or walking around, and referrals from family and friends.
- Financing options
Most first-time home buyers find an easy way out through mortgages, especially where the credit history is impressive.
- Making an offer
The real estate agents will help the buyer place an offer regarding the cost and any conditions desired. If an agreement is reached, a good-faith deposit is made, after which the process transitions into Escrow (a period, normally within 30 days when the seller takes the home off the market with the expectation that the buyer will take the house upon inspection and subsequent satisfaction).
- Home inspection
A trained home inspection expert should inspect the home to ascertain that quality, safety, and condition meets the minimum requirements to be used as a home. The money may be refunded if the home is found unfit.
- Closing in
Where the inspection reveals no defect, and there is a contractual agreement between the buyer and the seller, final payment and other paperwork are concluded before the buyer moves in.
Home ownership goes beyond payment of mortgages and down payment. However, this simple guide takes every first-time homebuyer through the process of acquiring a new home. Once the due process and required paperwork are satisfactorily followed, the process naturally culminates into a new home acquisition.
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.