7 Key Steps to Buying a Home
7 Key Steps to Buying a Home
1. Know what you can afford
Review your budget and decide what monthly payment you can afford. Unlike renting, you will likely have costs for home maintenance, repairs and improvements in addition to your monthly mortgage payments. Make sure to leave space in your budget for those expenses too. Your mortgage payment will need to include both the monthly payment and escrow for property taxes and homeowner’s insurance. Start saving as early as possible for a down payment and closing costs.
2. Know your credit score
Before you apply for a mortgage, check your credit score. Your credit score tells lenders how credit worthy you are and will be considered when approving you for a loan. Most lenders will require a minimum credit score of 580-620 for a mortgage. A free copy of your credit report is available once per year from www.annualcreditreport.com. For a small fee, you can obtain your credit score.
3. Find a good lender
When you’re ready to move forward, you will want to find a good lender. Whether it’s a bank, credit union or mortgage company, make sure that you consider more than just the best rate, such as making sure you’re dealing with someone who is helpful and honest, gives you personal service, and will work with you to find the best mortgage solution to fit your individual needs. Credit unions typically have lower rates and more personal service than big banks or large mortgage companies.
4. Get a pre-approval letter
A pre-approval letter shows the realtor that you are in a position to make an offer on that “perfect” house as soon as you find it.
5. Find a good Realtor or Buyer’s Agent
Although you may have done your homework online researching available homes, your best bet is to work with a good, local agent who knows the area and can give you the personal service you need. They will help you search for the type of house you’re looking for and work on your behalf to help get you into the house you want.
6. Know what you want
It is important to know what you want in a home. Is location, style, or size the most important? Which features are optional versus ‘must haves’? You probably won’t find that “perfect” house that has everything on your wish list, so it’s best to decide ahead of time which items are most important “must haves” and what things would be nice, but you could do without.
7. Respond quickly
In a seller’s market where the inventory of houses is low, it helps to be one of the first offers on the table. Being the first offer doesn’t mean it will be accepted because sellers may consider other factors such how much the offer is and what type of financing the buyer has. Often, eager buyers will offer more than the asking price and/or offer cash versus financing.
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