How to Buy a House: Nine-Step Home Buying Guide
Many people begin the journey of homeownership by learning the process. How do you buy a house for the first time? What steps should you plan for in your own home purchasing experience? These are questions commonly faced by people who have just decided about buying a house. This article will walk you through everything you need to know step-by-step. Read this article to learn more about buying a house and join us for the nine-step home buying guide.
9 Steps in Home Buying
1. Choose Your Budget and Market
Every home purchase has a price-range. Starter homes range from $100K to $200K. Upper-range homes are between $400K and $700K, and there are million-plus homes that are mansions and beyond. The exact range will be determined by the market you’re shopping in as well as the home features you want.
First and foremost, pick your price range. Use online tools to calculate how this will look as a mortgage as well as your predicted monthly costs in payments and insurance for each price-range of homes. Then research home prices in your desired neighborhoods to make sure you’re shooting for a realistic goal.
2. Save Up for a Few Years
First-time home buying doesn’t happen overnight unless you’ve already been saving for years. Normally, the downpayment portion of a home purchase, somewhere between 2% and 20% of the home’s value, is something you must save up for. Having the downpayment ready both gets you a better interest rate and acts as early collateral on your loan. Most new homeowners save for a few years with a goal based on their dream home price range.
3. Begin House-Hunting
When your downpayment is saved up, it’s time to start house-hunting. You are now financially ready to approach buying a home that is currently on the market. Explore homes in the regions as well as neighborhoods you are interested in. Investigate for the right number of bedrooms and the right property features. Look for homes that make you smile to walk through and that you would enjoy living in and, of course, stick inside your price range.
4. Build a List of Finalists
Once you have explored a few dozen houses online and in person, make a list of finalists. Rank the homes by what feels like your favorite houses, objectively list the pros and cons of each. Calculate which have the most features you like and which have features you don’t like. Use this process to identify a few finalist houses that you’d be willing to bid on and choose a single best-in-show winner as your first pick.
5. Apply for Mortgage Pre-Approval
Now apply for your mortgage, when you have a few homes in a definite price range in mind. The lender you choose will appreciate your firm decision-making. Ask to apply for a loan to be pre-approved.
Pre-approval means that your application has been accepted. The lender will lend to you – but the loan isn’t active yet. This means you can go into a home bid with guaranteed financing but don’t have to take the loan until the purchase is complete.
6. Inspect the Winning Home
Go to your finalist house and schedule a top-to-bottom property inspection. Have an engineer confirm that everything about the house is in working order and warn you about the oldest systems that may need repair. Don’t take a house with a broken roof or foundation unless the price is slashed. Keep an eye out for invisible damage like mold infestations. This step is to ensure that you get the full value of the home and avoid any lemons.
7. Bid on a House and Negotiate
Take your pre-approved mortgage as well as your clean inspection report to the selling real estate agent and make a bid. There might be bidding competition or the seller might accept your offer and enter negotiations right away. If your bid is accepted, begin negotiating on the best price based on maintenance assets and penalties. Talk about the state of the roof, the age of the appliances, recent renovations, and seller provisions that might duck the price for you. Then close negotiations with a handshake and sign the papers.
You may be asked to pay Escrow or Earnest Money. A ‘good faith’ mini downpayment to the seller that goes to your first property tax payment when you buy.
8. Buy the House and Pay Closing Costs
When the sales contract is signed, contact your lender as well as have them pay the full amount of the mortgage to the seller. Then your mortgage payments begin, and so does your homeownership. There may be a few final costs like title updating fees to take care of.
9. Move into Your New Home
Finally and victoriously, you can move into your first personally owned home. Bring the moving trucks as well as the whole family to help you unpack and celebrate your new homeowner status.
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