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  • 5 Steps Toward Buying A Home

    Wednesday, December 28, 2016   /   by Olivia Martin

    5 Steps Toward Buying A Home

    Buying a home can be a particularly stressful, painstaking process, especially for first-time home buyers. To prepare you for the real estate market, follow these 5 steps toward buying a home.

    #1 Save Years In Advance

    Down payment requirements depend on the loan program, ranging anywhere from 3% to 20% of the home value. Zero down payment loans are also available from the USDA or VA for those who qualify. Most buyers should expect to put a large sum of money down to buy a home, so it’s important to plan on saving years in advance. 

    In addition to the down payment, is the closing costs. While it depends on the state, closing costs can add several thousand dollars on the cost of the sale. Some sellers may agree to cover the closing costs for the buy, so be sure to consult with a real estate agent to try to work that into the contract.

    It’s also important to save for additional cash reserves after buying a home. Not only is it a requirement by some lenders, but is also financially safer to not put all your eggs in one basket.

    #2 Estimate What You Can Afford

    The next step is to determine how much you can afford putting into a home. The size of your approved loan will be determined by your income, the down payment you saved for, assets, and debts, liabilities, and other obligations.

    The general rule of thumb for homebuyers is to stay within a price range that is no more than “three to five times than your annual household income”, or “payments under 36% of household income.” 

    #3 Keep An Eye On Your Credit

    To get a good loan with good rates, you need good credit. As the determining factor in the mortgage loans and interest rates you qualify for, it’s essential to keep a close watch on your credit score. It’s possible for errors in the calculation of your credit score, so be sure to check for mistakes and dispute it if one exists.

    #4 Get Pre-Approved For A Mortgage

    There are a couple of advantages of getting pre-approved before your home search. A pre-approval will allow to know exactly how much you can afford, as wells as put you a step ahead other buyers toward making an offer on that perfect home you come across. 

    Before getting pre-approved, you will need to be pre-qualified. This is a simple process of providing your mortgage lender with your income, asset, and credit information. The mortgage lender will then determine how much you’ll be approved for.

    Getting pre-approved goes a step further, requiring documentation of your W-2s, bank statements, pay stubs, and possibly your federal tax returns.

    Once pre-approved, you’ll be ready for a mortgage loan. Having this pre-approval signals to sellers that any offer you make is serious. It’s a competitive market with today’s low inventory and high buyer demand for housing, so having this advantage over other buyers is important.

    #5 Hire A Real Estate Agent

    Hiring a real estate agent is single most important step to take before making an offer on a home, especially if none of the above steps were taken. A home, for most people, is the most expensive investment you will make in your lifetime. A good real estate agent will make all the difference in the successful sale of a home, whether buying or selling. 

    There is a long list of codes and regulations associated with real estate, which changes every year, and can be complex to fully understand and abide by. Real estate agents are required, by law, to stay up-to-date with these codes and assure that nothing is violated. 

    Being experts in the industry, real estate agents give quality advice for the best people to contact for mortgage information and home inspections. 

    Hiring a real estate agent is worth the investment because real estate agents have the knowledge and experience in the local market to effectively negotiate a better sales price, while assuring the contract is without flaws or loopholes.

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    Hart Real Estate Solutions—Your Trusted Guides

    Source: 

    First Time Home Buyer : The Late-2016 Guide to Buying a Home” by Dan Green


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