Before you take giant steps or make commitments, take a long, hard look at your finances and decide if a maintaining a mortgage payment is possible in the first place. There are many pros and cons to home owning, so weigh them against renting.
Be aware of sleeper costs, which are costs associated with homeowner ship besides the mortgage, taxes and insurance. Garbage pick-up, home owner’s association fees, gas and water bills, etc. Many websites are available to help you catalog and budget for monthly expenses and debt to get an idea of an affordable loan amount and resulting mortgage payment.
When You Can Afford to Buy a Home
Once you’ve determined your finances are situated well enough to buy a home, you can research houses on the Internet to get an idea of what features and kinds of homes are available within your estimated budget. To avoid potential heartbreak, contact a lender to discuss a preapproval loan amount so that you can look within a certain range of prices and not fall in love with an unaffordable home.
Working With the Lender
The lender will pre-approve you for a certain dollar amount based on estimated income and a credit check. By securing the preapproval letter, you show sellers that you are serious about a home purchase and that you have the backing or support from that lender or bank, pending the further verification of funds, employment, etc.
What to do With the Preapproval Letter
Start shopping for homes. There are many, many websites that catalog real estate on a national level, and there are just as many sites that focus on your local area. When you find a house you think you might be interested in, contact the real estate agent listed to schedule a viewing.
Real estate agents can show you any property, regardless of the real estate company advertising sign on the home’s lawn. Try to avoid dual agency, which is where a single agent represents the buyer and the seller because they work for both side’s interests. Your real estate agent should be a buyer’s agent who works hard to make sure you’re happy with the entire home buying process.
Viewing the Home
When you take a look at houses you like, try to imagine yourself living the space. Check outlets, if windows work or not, bathroom floor plans, etc. Are the ceilings high enough? Is an updated kitchen necessary? Feel free to take measurements of door frames or windows.
Take pictures so that you can compare different houses against each other. When you finally select a home you feel comfortable with, it is strongly recommended you have an inspection done. The inspector is an upfront, out of pocket cost, but it gives you the nitty gritty truth about the home and in some cases, the real estate agent can alter the purchase agreement so that the seller makes repairs prior to closing on the house.
If they refuse to make the repairs, they may lower the purchase price. Always bid low, and meet the seller in the middle. Try to get below the asking price and never, ever offer more than asking.
Getting the Loan to the Underwriter
When you and the seller have settled on a purchase price, the lender comes back into the picture. They will then gather a large assortment of documents from you and compile a file that will be forwarded to the loan underwriter for review. Such documents include employment verification, any foreclosure or bankruptcy information, bank statements, year-to-date paycheck stubs, house insurance quote, etc.
While You Wait
It takes time for processing, in the mean time plan for the logistics of making the move such as switching utilities, renting the moving truck, change of address forms, learn the new neighborhood. Know where the closet hospital, library, post office, grocery store are located in relation to the new home.
Closing Day
The day of closing will rush towards you and be just around the corner before you know it. After completing another round of bombarding paperwork, the keys, the deed, the home are all in your possession. Congratulations, Homeowner, and Good Luck.
Sabrina Hanna - My name is Sabrina Hanna and I'm a recent graduate from the University of Toledo in Toledo, Ohio. I recieved a B.A. in English with a ...
