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12 Steps to a Successful Home Buying Experience

12 Steps To A Successful Home Buying Experience

Professional Tips For First Time Home Buyers - A quick checklist for your home buying journey.

If you have included home ownership in your list of goals to reach within the next year or two, it means you are thinking more about homes, credit, finances, and mortgages. When we start thinking about this things, all sort of questions start popping up in our heads.   If you have questions about the home buying process and about various steps to be taken along the way. This article, in a sequential way, lays it all out for you, from start to finish.

Here are the 12 steps you should take to reach your home ownership goal:

  1. Check Your Credit

According to industry experts, home buyers generally need a credit score of 580 or higher to qualify for a home loan, and 720 or higher to qualify for the lowest interest rates available. But these numbers are not set in stone.

So your first step should be to review your financial situation. Order your credit reports from Experian, Equifax and TransUnion, and check them for errors. You can also receive a free copy of your credit reports at https://www.annualcreditreport.com . Order your credit score (different from your reports) to see how you stack up against the national average. If necessary, focus on improving your score by avoiding making new applications for credit, paying down credit card balances, and making sure bill payments are made on time.

  1. Determine how much home you really can afford

When you apply for a pre-approval letter, a mortgage lender will tell you what you the loan amount you can qualify for based on your income, existing commitments, and specific financial circumstance. In reality, the only thing a lender is telling you is the amount you qualify for — not the amount you can realistically afford to live without financial stress and with room to continue saving for your other financial goals. You should determine your home buying budget for yourself. Check our free mortgage calculator to make this process easier for you. You can play different scenarios until you get to a monthly payment amount that you and your family feel 100% comfortable with.

  1. Research and Choose a Mortgage That Best Matches Your Specific Situation and goals

Do you know the difference between a fixed-rate mortgage and an ARM? Adjustable or fixed? This is just one of the things you need to understand before applying for a mortgage loan. The key to success when choosing a mortgage is to consider your long-term plans and find a loan that matches those plans. To do this, you must learn the pros and cons of the primary loan types. Consider the differences between FHA-insured and conventional loans, as well.

  1. Get Pre-Approved for a Loan

Pre-approval is a process in which the mortgage lender reviews your financial and credit history to determine your “creditworthiness.” When you get pre-approved for a certain loan amount, there’s a good chance you’ll receive final approval for that amount as well, when the time comes.

Having a pre-approval letter in hand also shows real estate agents and home sellers that you are serious about (and capable of) purchasing a home. This can make a big difference in active real estate markets, where the seller may receive multiple offers from competing buyers. If you feel you are ready to take this step, you can get your pre-approval here, today.

  1. Find a Real Estate Agent

If you are buying a home for the first time, or  even if you are an experienced home buyer, don’t do it by yourself.  Hire a professional real estate agent. It does not cost you (real estate agents typically are paid by the seller) and it will save you a lot of headaches. A seller’s agent represents the interests of the seller. A buyer agent will seek and fight for what is best for you. A real estate agent will not only help you to find the perfect home for you, he or she will provide guidance, negotiate and review contracts on your favor, review documents, help you with inspections, and make it much easier for you to finally close on a home. Choose an agent who specializes in helping buyers, as opposed to sellers.

  1. Buy a neighborhood, not a house – Narrow Your Search

The neighborhood you choose is as important as the house itself, because both have a direct bearing on your family quality of life — not to mention future resale value. So research the different neighborhoods and communities in your area. Talk to people who live in them. Use the Internet to gather information. You’re not just buying a house; you’re buying the location as well.

  1. Begin House Hunting

This is where you and your agent visit homes to find one that matches your needs. Here are some helpful tips. Take a digital camera with you to get pictures of each home. This will help you remember the details later on. Bring a notepad for the same reason. While you’re at it, you might want to bring a friend along for an unbiased opinion of each property — you know, that outspoken friend who calls it like it is.

  1. Evaluate the Asking Price

It’s called the “asking price” for a reason. Just because a property is listed at $250,000 doesn’t necessarily mean it’s worth that amount. It might be wishful thinking on the seller’s part. This is another area where it helps to have a real estate agent. Most agents are experts at validating sale prices against recent sales in the area, and that’s the best way to find out if the price is realistic or inflated.

  1. Make an Offer

Once you’ve determined that the price is fair and reasonable, you are ready to make an offer on the property. Always make the offer contingent upon the home inspection (see next item). That way, if the inspector uncovers an issue that you consider to be a deal breaker, you have a way out of the contract. Ask your agent about these and other “contingencies.”

  1. Get a Home Inspection

Property inspections usually only cost a few hundred dollars. That’s a small price to pay for the peace of mind you get in return. A home inspector will review the structural and mechanical aspects of the house, including (but not limited to) the roof, foundation, electrical, and heating / cooling system.

  1. Attend the Closing / Settlement Process

So, you’ve made it through all of the inspections and the process is still on track. Great! The next step will be the closing / settlement process (it goes by different names in different parts of the country). You can prepare for this process early by putting extra money aside. This is when the title to the property is transferred from the seller to the buyer. You’ll also be signing a lot of paperwork and paying any other fees that are due.

  1. Tie Up Loose Ends

After your move, you’ll have a few more tasks on your list. Transfer your utilities if you haven’t done so already. Complete a change-of-address form with the post office (you can do it online these days). Get a safe deposit box for your home insurance policy and other important documents. Set up a mortgage payment schedule or an online auto-pay system. And give yourself a pat on the back … you’re now a homeowner!

Take a BIG STEP today. Get your pre-approval!

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