7 Essential Steps to Buying a Home
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By: Bob Shannon
You’ve decided to buy a home and you couldn’t be more excited. It truly is a thrilling experience and a big step toward the next chapter in your life. However, a lot is involved in the home buying process, and it’s important to learn about or refresh your knowledge of what to expect before you dive in headfirst. To help, here are seven of the most essential steps you will need to take when buying your first (or next) home.
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1. Check your credit
Getting a free credit report from each of the three reporting bureaus (Equifax, Experian, TransUnion) will show you what your credit score is. This score plays a major role in the type of mortgage you can expect to qualify for, which will help you determine how much house you can afford. Also, if you do this step early enough, you might have time to take steps toward improving your credit score.
2. Find out what kind of loan you can get
You will also want to get pre-approved for a mortgage early in the process. This step will further help you determine how much house you can afford. And if you happen to get into a bidding war with another buyer, your pre-approval can give you an edge.
There are various types of home loans to consider, each of them working better for specific situations. For example, if this is your first time buying a home, you don’t have a lot of money for a down payment, and your credit score is too low to qualify for a conventional loan, an FHA loan might be the best path forward. Or, if you anticipate earning more income in the future, you can get a floating rate mortgage, which starts out with a lower interest rate the first few years, but then varies at a predetermined rate.
You can also explore paying points on your mortgage to find more favorable terms. This involves paying a fee to your lender to secure a lower interest rate. Typically, paying for points works best for homeowners who plan to live in their homes for many years, so if you think you’ll be selling your home in a few years, this may not be the best option. A mortgage points calculator can help steer you in the right direction.
3. Get an experienced real estate agent
Your real estate agent should be able to help through most of the home buying process. Dedicated realtors like Jane & Richard Noltensmeier are knowledgeable of the local market and can help you adapt quickly to changes in the market and economy. This will give you an advantage when it’s time to look at available homes for sale.
4. Hunt for the right house
Searching for your new home is probably the step that you’ve thought about the most. Indeed, it’s exciting, but it can also be a lot of work. Your real estate agent might know of some homes off the top of their head that could meet your needs, wants, and budget, but you will also want to use listing websites to get a feel for the local market.
Once you and your agent have narrowed down a few homes, you will set up some tours. If none of the homes seem like they will work out, you’ll find a few different homes, tour those, and repeat the process until you find the “one.”
5. Start the negotiating process
You will make an initial offer on the home you’re interested in. FindLaw explains that your agent will be able to use their expertise in the local housing market to craft a reasonable offer with you. Expect the seller to present a counteroffer and to negotiate the purchase price and various contingencies. However, if the seller accepts your first offer, you’re good to go!
6. Get a home inspection
When you and the seller have come to an agreement on the sale, you will need to hire a professional home inspection. The inspector will do a thorough walkthrough of the home and make a list of any repairs and other changes that need to be made. Then, you will need to negotiate with the seller on what repairs they’re responsible for making, as well as whether they will make them before you close, provide you with repair credits, lower the purchase price, etc.
7. Do a final walkthrough
Before you close, you will need to do a final walkthrough where you make sure the property functions as it did when you made the offer and that any agreed-upon repairs have been completed. If you’re satisfied, you move onto the closing process!
Knowing what to expect will help you plan and make good decisions throughout the home buying journey. Be sure to do further research on each of these steps and get to know your local housing market. Soon you’ll be getting the keys to your new home!
