| In the last few years, the process of buying a home | | | | worthwhile to hire an agent. Choose an agent who |
| has been altered by the so-called mortgage crisis and | | | | specializes in helping buyers, as opposed to sellers. |
| the continued evolution of online real estate tools. So in | | | | 6. Narrow Your Search |
| this article, we will take a fresh and modern look at the | | | | The neighborhood you choose is nearly as important |
| process of buying a house. More specifically, I will | | | | as the house itself, because both have a direct bearing |
| outline the general process in twelve clear steps. | | | | on your quality of life -- not to mention the future |
| 1. Check Your Credit | | | | resale value. For these reasons and more, it's always |
| Credit scores have always been important for home | | | | best to live in a city for a while before buying a home, |
| buyers, but they are more in the wake of the | | | | even if it means renting an apartment for a while. That |
| mortgage meltdown of 2007 - 2008. According to | | | | way, you can discover which areas you like best |
| industry experts, home buyers in 2006 needed a credit | | | | before committing to an area. |
| score of at least 620 to qualify for the best interest | | | | 7. Begin House Hunting |
| rates on a loan. Two years later, borrowers needed a | | | | This is where you and your agent visit properties in |
| score of 760 or higher to get the best rates. That's a | | | | order to find one that matches your needs. Here are |
| much stricter requirement! | | | | some helpful tips. Take a digital camera with you to |
| So your first step should be to review your financial | | | | get pictures of each home. This will help you recall the |
| situation. Order your credit reports from Experian, | | | | details later on. Bring a notepad as well, and for the |
| Equifax and TransUnion, and check them for errors. | | | | same reason. While you're at it, you might want to |
| Order your credit score (different from your reports) | | | | bring a friend along for an unbiased opinion of each |
| to see how you stack up against the national average. | | | | property -- you know, that outspoken friend who calls |
| If necessary, focus on improving your score by paying | | | | it like it is. |
| down credit card balances, making all future payments | | | | 8. Evaluate the Asking Price |
| on time, etc. | | | | It's referred to as the "asking price" for a good reason. |
| 2. Determine Your Budget | | | | Just because a property is listed at $250,000 doesn't |
| Don't make the mistake of letting a mortgage lender | | | | necessarily mean it's worth that amount. This is |
| tell you what you can and cannot afford, in terms of a | | | | another area where it helps to have a real estate |
| monthly mortgage payment. In reality, the only thing a | | | | agent. Most agents are expert at validating sale prices |
| lender can tell you is the amount you qualify for -- not | | | | against recent sales in the area, and that's the best |
| the amount you can realistically afford. In other words, | | | | way to find out if the price is realistic or inflated. |
| you should determine your home buying budget for | | | | 9. Make an Offer |
| yourself. There are a lot of free mortgage calculators | | | | Once you've determined that the price is fair and |
| online that can make this process easier for you. | | | | reasonable, you are ready to make an offer on the |
| 3. Research and Choose a Type of Mortgage | | | | property. Always make the offer contingent upon the |
| Do you know the difference between a fixed-rate | | | | home inspection (see next item). That way, if the |
| mortgage and an ARM? This is just one of the things | | | | inspector uncovers an issue that you consider a deal |
| you need to understand before applying for a | | | | breaker, you have a way out of the contract. Ask |
| mortgage loan. Because of increased competition in | | | | your agent about contingencies. |
| the lending industry, there are more types of home | | | | 10. Get a Home Inspection |
| loans today than ten years ago. The key to success | | | | Most inspections only cost a few hundred dollars. |
| when choosing a mortgage is to consider your | | | | That's a small price to pay for the peace of mind you |
| long-term plans and find a loan that matches those | | | | get in return. A home inspector will review the |
| plans. To do this, you must learn the pros and cons of | | | | structural and mechanical aspects of the house, |
| the primary loan types. | | | | including (but not limited to) the roof, foundation, |
| 4. Get Pre-Approved for a Loan | | | | electrical, and heating / cooling system. |
| Pre-approval is a process in which the mortgage | | | | 11. Attend the Closing / Settlement Process |
| lender reviews your financial and credit history to | | | | So, you've made it through all of the inspections and |
| determine your "creditworthiness" ... an industry term | | | | the process is still on track. Great! The next step will |
| that means: "How much of a risk is this person, and | | | | be the closing / settlement process (it goes by |
| how much are we comfortable lending?" When you | | | | different names in different parts of the country). |
| get pre-approved for a certain loan amount, there's a | | | | Actually, you can prepare for this process early on by |
| good chance that you'll receive final approval for that | | | | putting extra money aside. This is when the title to the |
| amount as well, when the time comes. | | | | property is transferred from the seller to the buyer. |
| Having a pre-approval letter in hand also shows sellers | | | | You'll also be signing a lot of paperwork and paying |
| that you are serious about (and capable of) purchasing | | | | any other fees that are due. |
| their home. This can make a big difference in hotter | | | | 12. Tie Up Loose Ends |
| real estate markets, where the seller may receive | | | | After your move, you'll have a few more things on |
| multiple offers from competing buyers. | | | | your task list. Transfer your utilities if you haven't done |
| 5. Find a Real Estate Agent | | | | so already. Complete a change-of-address form with |
| If you are buying a home for the first time, or in a new | | | | the post office. Get a safe deposit box for your home |
| city you're not familiar with, it's wise to hire a | | | | insurance policy and other important documents. Set |
| professional real estate agent. When you compare the | | | | up a mortgage payment schedule or an online |
| amount of money you'll pay for a new home with the | | | | auto-pay system. And give yourself a pat on the back |
| size of the agent's commission, you'll see that it's | | | | ... you're now a homeowner! |