Buying a dream home is not only an exciting journey but it also can turn into a stressful and confusing nightmare if not planned properly.
Here are the 6 simple steps that any home buyer can follow to ensure an uncomplicated and enjoyable buying experience.
Step 1: Maintaining Good Credit Score
The primary and fundamental step that buyers should tend to prior to buying a home is to maintain a good credit score. Decent credit score and credit history play an important role in buying a home. Building a good credit record is a long term activity and it should be planned way before buying a house.
So, paying bills on time, keeping the credit card balances low, managing your debt and payments, and limiting your credits are some of the best practices that can allow a buyer to build a good credit score.
A buyer should embrace this lifestyle of maintaining good credit since a score of 620 or higher is best for obtaining home mortgage loans.
Buyers can use online websites to soft check their credit scores independently for free of cost, however, in order to get accurate credit scores from the registered credit bureaus, buyers can approach their real estate advisors, financial advisors, or financial institutions.
Step 2: Understanding the Finances of Home Buying
Buyers should have a rough estimate of their required budget before hunting for a house. Understanding their budget flexibility and affordability are key factors for buying a home.
Knowing your monthly net income after taxes and monthly expenditures including (and not limited to) car loan payments, wireless mobile payments, grocery and other expenses provides a clear picture to the buyer and lender about their debt-to-income ratio, which should be 43 percent or lower. Debt-to-income ratio is the amount of your monthly costs divided by your gross monthly income.
This exercise also allows buyers to plan how much monthly mortgage loan repayments they can afford and how much they must save in order to fulfill their dream.
Aside from budgeting, it is also crucial that buyers save adequate balances in savings before shopping for houses. Some homes require buyers to invest down payments ranging from 5 percent to 30 percent (typically 20 percent), so buyers must be ready with the saved amount before going for a home hunt.
Apart from the down payment, there are other costs such as loan organization fees, appraisal fee, credit report fee, mortgage insurance premium, deed recording fees, real estate attorney fees, etc. that can incur during the entire home buying process, referred to collectively as closing costs.
Buyers should research and understand various costs that are involved for buying a house and save sufficiently to meet all the financial needs.
Buyers can use freely available online calculators to understand the financial requirements like down payment, home mortgage loan interest rates, closing costs, etc. however, a real estate advisor or attorney can provide precise information about your financials needs and requirements.
Step 3: Finding the Right Real Estate Agent
Guiding the buyers to fulfill their dreams is an important duty of any real estate agent. It is important for a buyer to find a skilled and knowledgeable real estate agent who can provide appropriate guidance for the home buyers to accomplish their home buying mission.
The right real estate agent will be a person that possess adequate knowledge about the real estate markets and trends, help in identifying the financial affordability of buyer, assist in narrowing down and setting up the priorities by understanding the buyer requirements, assists in applying and processing home mortgage loans, is capable of negotiating financial transactions, helps in reducing the stress related to the transactions and paperwork, and finally, protect you financially by helping you understand offers, negotiations, and contracts.
The best thing for a buyer should do is to make additional efforts initially to research for finding a perfect real estate agent for meeting their needs and to make their home buying journey stress free.
Step 4: Getting Pre-Approved for a Home Mortgage Loan
Buying a house involves huge capital investment and not all can afford paying the total cost upfront. Most of the home buyers rely on banks, non-bank lenders, and mortgage brokers to get the home mortgage loan for fulfilling this dream.
A home mortgage loan is financial assistance provided by a mortgage lender that enables a buyer to own a house without having all the cash up front. Any bank or financial institution generally provides a pre-approved mortgage loan affordability estimate to buyers based on their income and expenses.
This pre-approval document for a home mortgage loan is issued by a recognized financial institution not only provides details to buyers about their home-buying budget, but also improves the seller’s confidence in considering your offer.
Step 5: Finding a Right Home
Upon keeping the finances intact and getting the pre-approval for home mortgage loan, now, it is the time for a buyer to shop for a dream home.
Searching online on your own for the right home can sometimes become stressful and overwhelming. It is best to leave the home-finding to the real estate agent.
A good real estate agent can filter down your research and recommends appropriate properties that match your dreams.
During this stage, a buyer should attend open and private showings, view variety of properties to realize their interests, understand their likes and dislikes, and eventually find a home they’re ready to make an offer on.
It’s also critical to understand and research the neighborhood. A home that has easy accessibility to public transportation, highways, schools, parks, hospitals, grocery stores, cinema theaters, and shopping malls, etc. is always a popular request, but can also be the most expensive.
If the buyer finds the suitable home with the help of a good real estate agent, it’s time to place a compelling offer or bid on the house.
Step 6: Placing an Offer and Closing the Transaction
Making an offer on a house can be tricky. You want to save as much money as you can, but you also want your offer to be compelling and competitive. And, you don’t want to offend a seller by low-balling them off the cuff. Your agent will help you draft and submit an offer.
Expect that other offers may also come in on the house from other buyers, so don’t emotionally attach until the deal is done. Once your offer is accepted, you’ll have to be patient while the house is inspected, appraised, and goes through the necessary processes of real estate transactions. When all the steps have been completed and closing costs have been paid, you’re ready to receive the keys to your new home
Have Questions? Ask The Kevin Pickles Team!
Your real estate agent is the best source of information about the local community and real estate topics. Give The Kevin Pickles Team a call today at (678) 887-1967 to learn more about local areas, discuss selling a house, or tour available homes for sale.
