Buying a house is a significant decision for any consumer, and we wholeheartedly endorse it. The single largest method Americans accumulate money and get ready for a secure retirement is by becoming homeowner. And unlike other investments, you can live in your house, so it’s not just a way to store and build wealth over time.
Although purchasing a home can be a drawn-out and complex process, fortunately, no one needs to go through it alone. Professional assistance is available to all homebuyers, including mortgage brokers, real estate agents, housing counsellors, inspectors, and more. To guarantee their success, anyone wanting to purchase a property should make use of all the resources accessible.
The Home-Buying Process
1. Pre-Purchase Education
Far too many individuals neglect this important initial step. To help prospective homeowners comprehend the whole process ahead of them, there is first-time homebuyer education available. It is best to start this sort of course as soon as possible.
Many people enrol in the class for the wrong reasons and too late. This is due to the fact that those who finish the first-time home buyer education programme are eligible for financial aid options such as down payment or closing cost assistance. To get the assistance, one must show a certificate of completion indicating they’ve taken the pre-purchase education course. Where too many people go wrong is taking the class at the last possible minute, just to get a certificate. Taking the course early will save any homebuyer money and stress as they understand how to avoid mistakes and navigate the home-buying process efficiently.
2. Check your Credit
Examine your own credit reports prior to allowing a lender to verify your credit. Using www.annualcreditreport.com, you may do this for free. It’s important to do this before submitting your mortgage application.
You have time to get any mistakes—inaccuracies or out-of-date information—fixed before your lender demands your credit report and score. You might also see items on your report that are legitimate, but you had forgotten about it. The more you know in advance, the better off you’ll be when you fill out your mortgage application.
The goal is to ensure your credit reports are accurate, up to date, and reflect positively on you. We offer a free Consumer Guide to Good Credit to help understand the process of reading and updating your credit reports, and there are credit report review services if you’re struggling to interpret what you find in your credit reports.
3. Get Pre-Qualified for a Mortgage
Here’s another area where a lot of purchasers go wrong. You can squander time looking at homes you might not be able to afford if you begin your home search too soon. The worst-case situation is when you fall in love with a house and are ready to submit an offer, only to discover that the amount of the loan you want to borrow is not available for you to borrow.
When you prequalify, the lender provides you with an approximate estimate of how much you may borrow and if you will be accepted. This pre-qualification isn’t a guarantee that you’ll be approved, and it doesn’t mean you have to borrow from that particular lender. It’s just a way of getting a lender to tell you realistically what your price range should be.
Once you have this pre-qualification, then you can start looking for a home without being in danger of overspending; you can avoid looking at homes that might be outside of your true price range.
We always caution people not to borrow the maximum amount they qualify for. It’s wiser to stay well within your means, and only borrow what you can comfortably afford.
4. Work With a Real Estate Agent
A professional real estate agent will look out for you, making sure you find the best home for your situation, and that you are protected in the negotiating process. A good local agent will also know more about the areas you’re shopping in, so you can avoid areas with poor-performing schools and public services, crime problems, etc.
You will also need other professional help along the way, like home inspectors, insurance companies, contractors, etc. A real estate agent will be able to make informed recommendations that you can trust more than an online review. It’s VERY rare for a home buyer to navigate the home buying process without a real estate agent. And the agent is paid out of the proceeds of the sale, so you don’t have to worry about his/her fees.
5. Shop for a Mortgage
At this point, it’s okay to start shopping around for a mortgage. There are different types of home loans available, so get help if you need it to figure out what your best option is. Pre-purchase coaching is a good option if you want to be sure you’re making the best possible decisions.
This is the step in the process where you officially fill out a mortgage application, so hopefully, you have already reviewed your credit and made any necessary corrections. The lender will give you a pre-approval for a particular amount and interest rate, so you’ll be able to hone in on the right property to buy. In a hot market, it may be necessary to make an offer fast and sellers give preference to buyers who are pre-approved. Pre-approval tells them that when it’s time to close, they will have the money.
Also, do some comparison shopping for mortgage products, and compare the costs from one lender to the other.
6. Shop for a Home
This can be a stressful time. In a good market, houses won’t stay available for long, so you might feel pressure to make offers quickly rather than lose a property. Try to strike the right balance; don’t move too quickly and pay more than you have to, and don’t go so slowly that every good property is snatched up before you make your offer.
If you’re working with competent professionals, they’ll be able to help you weigh all of the considerations and make a good choice. Bear in mind that first-time homebuyers will move eventually, so the house you buy now probably won’t be the one you’ll spend the rest of your life in. If you’re moving into your 2nd or 3rd home, then you probably have formed some strong ideas about the kind of place you’d like to live in.
7. Get Inspections
After you make a formal offer on a property, your lender and real estate agent will work with you to hire inspectors. You will want to know if there are any concerns about the property before you go forward, and your lender will not want to give you money for the purchase unless they know the property is sound.
Besides the home inspector who checks out the electrical, heating & cooling, and plumbing systems, you’ll want secondary inspectors to check for insects, radon gas, mold, etc. The area you’re buying in will determine which specialists are needed to ensure you don’t have other problems. An older home might need more inspections than a newer home. Don’t skip any recommended inspections!
Ten Important Questions to Ask Your Home Inspector: https://www.hud.gov/program_offices/housing/sfh/insp/inspfaq
For Your Protection: Get a Home Inspection:
https://www.hudexchange.info/resource/4747/for-your-protection-get-a-home-inspection/
Once you have the inspection report, you might want to amend your offer. If there are major repairs needed, you could request the seller complete them, or take some money off of the sale price for you to do the repairs yourself. Don’t turn this part of the process into a way to negotiate a lower price—the point of the inspections is to ensure the house is safe and in good repair.
8. Set up home Insurance and Utility Services
Home insurance will be required by your mortgage lender. They would seek assurance that the mortgage will be paid back in the event of a fire or other calamity. Additionally, you should confirm that the insurance you choose actually covers any potential damages you could have. If necessary, you should obtain extra coverage for anything that standard homeowners insurance does not cover, such as flood damage.
The intention is to transfer utilities to your name either the day of the loan closing or the next day. If these things don’t coincide, then the seller will want to shut off utilities altogether, and then you’ll have to arrange to have them turned back on in your name. This is a slow process that could leave your home without heating, cooling, running water, etc. The best way to handle utilities is to time things so that they’re never shut off, but transition smoothly from one owner to another.
9. The Loan and Home Closing
The final paperwork to close on the home and the mortgage loan will involve more professionals, like title companies and potential attorneys. You’ll get a disclosure in advance that tells you what fees will be due at closing.
All of this paperwork and fees are to be disclosed in advance and are a standard part of every mortgage transaction, but don’t let yourself be blindsided. If you started with first-time homebuyer education or pre-purchase coaching, then you’ll be fully prepared for this part of the process.
Don’t spend your last available cash on closing costs and fees. You’ve got one last big step to follow, and you’ll need some funds available to complete the process.
10. Move In
Now that you’ve closed the loan, it’s time to move in. Using professional movers will make things go quicker and come with some protection from damage and the like but can get expensive. Moving in yourself will save you money, but involve extra time and stress.
It is imperative that you complete any urgent repairs while the house is empty before bringing in all of the furnishings. Do the carpets need to be cleaned? Paint and patch up plasterboard?
Rekey the locks and swap out the garage door opener code as soon as you are settled in to make the house fully yours.
Getting your house in order will guarantee that you and your family are ready for anything and that you have experts by your side to make sure everything goes as planned. The advantages of pre-purchase homeownership counselling are indisputable.