A lot of calendar pages will be torn away between the day you decide to buy a house and the day you move into one, but there’s no rule that says the time in between has to be a rough go. If you are aware in advance what steps you need to take and what kind of issues can arise during the home-buying journey, then the process will be much less stressful.
Follow these basic steps and you’ll have a much easier time of it than if you go into the process cold.
Get Your Credit In Shape
Get your FICO credit report from all three agencies (Equifax, Experian, and TransUnion) and make sure they are accurate and up to date. If your credit score is low and needs work, get after it! Find mistakes, resolve issues and pay outstanding bills. Remember: the higher your credit score, the lower the interest rate on your home loan.
Figure Out Your Price Range
How much mortgage can you afford without making yourself house poor? Use an Amplify Credit Union mortgage calculator to help you figure it out. Remember to factor in property taxes, utilities, HOA fees, homeowners’ insurance and all other costs. Your goal is to find someplace you can live comfortably without loading yourself with debt that will severely limit your ability to buy all the other things you need to live and enjoy life.
Save For The Down Payment
The ideal down payment is no less than 20 percent of the cost of the home. Of course, you can still buy a house if you don’t have that much to put down, but you’ll have to take a second mortgage to help cover the down payment and you will also be required to carry mortgage insurance. These extra costs will have a severe impact on your budget. The alternative is to work as hard as you can to save for your down payment. One solution is to take on part-time work. You don’t have to do it forever, just until you’ve put enough away to make a positive impact on your down payment fund.
Decide What You Want
Make a list of your must-haves – and determine which of them are within your budget. You might find that you can’t have everything you want, or that you can, but you have to move further from where you’d really rather be to get them. There are always going to be trade-offs and only you can decide what you’re willing to do without.
Learn The Market
Learn the neighborhoods and real estate market where you want to move. Don’t leave it up to chance. Identify neighborhoods you wouldn’t mind living in that have homes that are in your price range. Take some time to familiarize yourself with the quality of local schools (if that’s relevant) and what the tax rates are. By the time you’re ready to get serious about home shopping, you should have a good working knowledge of your target areas.
Get A Buyer's Agent
A good real estate agent is your confidante, ally, negotiator, and voice of reason. Let them know what you want. Get their input and ideas. Remember that they live this every day, so their counsel is to be valued. The best thing is that it won’t cost you a cent: A buyer’s agent gets paid by the seller’s agent.
Go House Hunting
Get out there and find that home! House hunting can be a lot of fun, especially when you’re pre-qualified, have a good amount saved for a down payment, know the territory, and have an outstanding buyer’s agent on your side.
Make An Offer
Have your realtor help you make a competitive, realistic offer that you can afford. A good realtor won’t let you get carried away and bid too much. Conversely, they will advise against low-balling as well, as that rarely works and usually just serves to antagonize the seller.
Have It Inspected
A professional inspection is a must. A good inspector will be able to identify problems that were not apparent – perhaps even to the seller. If too many problems are discovered, you can take a pass and move onto the next house. If the seller is motivated, you can negotiate getting items on the list dealt with before you give final approval.
Get Your Keys!
Get final loan approval, close the loan and move in!