No matter what the TV shows might suggest, buying a house takes time. When you first start thinking about a home purchase, it’s easy to let your emotions get in the way. The next thing you know, you’re looking at houses for sale online, sneaking in drive-by viewings, and researching creative ways to finance a home that may be out of your budget.
Buying a house that’s out of your budget can affect your ability to build wealth in the long run. It’s essential to understand the critical steps to buying a home, so you can make smart decisions that ensure you’re prepared for the future.
When is the Right Time to Buy a Home?
Before you begin the steps to buying a home, there are a few questions you should ask yourself:
- Which stage of life are you in? Buying a home is expensive, which is why you should plan to live in the area for five to seven years.
- What is your financial health? To get a loan, you need a stable income and money for a down payment. While you should put at least 10 to 20 percent down, a larger down payment can help you avoid the extra cost of private mortgage insurance (PMI).
- What is the housing market like? Try finding a home that has the potential to increase in value. A real estate agent can help you determine home values and their potential.
If your answers to these questions show that the time is right for buying a home, these steps will help you get started.
Step #1: Get Pre-Approved For a Loan
First, visit a lender to find out how much you can afford. They will ask you about your income, assets, and down payment. Your lender will also verify your financial information and submit your paperwork for preliminary underwriting.
You will get a pre-approval letter that shows how much you have to spend and that you are a serious buyer. Prequalification takes a little more work, but it can help speed up the home buying process.
Step #2: Find Your Real Estate Agent
Like most home buyers, your search probably started online. While you can do a lot of research on your own, working with a real estate agent is helpful when it comes to finding your perfect home.
A buyer’s agent can help you navigate the buying process. They may be able to help you see a home before it hits the market, which gives you an advantage. Also, your real estate agent can help you negotiate the contract details, so you don’t overpay.
Step #3: Start Looking at Homes
Shopping is the fun part! Before you begin, do your homework. Create a must-have list of features you’d like to have in your new home. If you are buying a home with a spouse or partner, make sure you are on the same page with what you want. Then, share your must-have list with your agent, and they will use it as a foundation for your home search.
Your real estate agent will help you target homes you can afford and set realistic expectations. They should have some homes that meet your requirements, so you can start looking at homes quickly. You should also use this time to narrow down exactly what you’re looking for, so you find the house that’s perfect for you!
Step #4: Make an Offer
When you’ve found the right home, it’s time to submit an offer and sign a contract agreement with the sellers. Your real estate agent will help you submit a solid offer. If you have a pre-approval letter and a flexible closing date, you may put yourself ahead of the competition, especially if there’s a bidding war.
Agreeing on terms is often the most challenging part of the process. It’s essential to be patient and remember that all parties want the same thing. You want to buy a home, and the sellers want to sell it. An excellent real estate agent can advise when to give in and when to stand firm.
Step #5: Arrange for a Home Inspection & Appraisal
After the terms of the offer have been accepted, schedule a professional home inspection. Typically, the offer you make is contingent upon a home inspection. The report will let you know about any structural issues or problems you might not see. If the inspection uncovers problems, you can ask the seller to make repairs, lower the purchase price, or cancel the contract.
Your lender will also require a home appraisal that evaluates the value of the property. An assessment will also protect you from overpaying for your new home. If the value of the house comes in lower than your purchase offer, your real estate agent can advise you what to do next.
Step #6: Close on Your House
You’re almost there! The last of the steps to buying a home is closing on your new place. During the closing, you will sign a mountain of paperwork, and you’ll pay for closing costs and other expenses.
Congratulations on your purchase. You are officially a homeowner!
Rely on the Sarah Bernard Realty Team to Help You Find Your Home
The home buying process may not be easy, but having the right real estate agent by your side can help you save you time and money.