Saturday May 27, 2017

Steps to Buying a House

If you reach a point in your life where it sounds appealing to buy a house, you’ll quickly discover that this process is quite a bit more complicated than it might first appear on the surface.

Buying a home is a very involved process which has a number of important steps.  It requires attention to detail, flexibility, persistence and realism.

There is a lot you’ll need to learn about the housing market, real estate agents and how they work, and yourself in order to complete the process. You must begin by looking at yourself and your own finances.

Do you know what your credit score is?

This is one of the most important numbers which lenders will look at when they consider whether or not to give you a mortgage.  You want your credit score to be higher than 620—the higher it is the better.  To find out your credit score you can order a free credit report from any of the three major credit agencies.

Everyone in the US is entitled to a free report each year from all three.  If you find out you have excellent credit you’ve made a great first step to buying a house already.  If you have poor credit or no credit, it’s time to establish some good credit before you try to buy a home.  You can check your score again later in the year by ordering another free report from a different credit agency.

Now you’ve done this, it’s time to look even more closely at your finances and consider another important number called your debt-to-income ratio.  This is the ratio of your monthly debts and bills measured against your monthly income.

Not only is this number of great significance to potential lenders, but it should be to you too!  If you are struggling to survive, this isn’t a good time for you to purchase a home.  If you’re doing pretty well though, you should start trying to calculate how much home you can afford.  Online calculators can help you figure this out, as can talking to a lender to see if you can get pre-approval for a mortgage.

Perhaps the best thing you can do though is then sit down and work out all the numbers for yourself.  It is critical you understand the flow of your own money as best you can. 

Pre-approval has another benefit too, which is that it makes it easier to buy a home, especially if there are other buyers interested in a specific house.  If you’re pre-approved and they aren’t, you are more likely to get the house.

Before diving into the housing market, educate yourself on the housing market as a whole, the market in the area where you want to buy a home, and learn in depth how real estate agents conduct business and.  Research government programs; some are available to help certain first time home buyers.  Learn about mortgage insurance.

Next think about the kind of house you want and what your most important requirements are.  Be ready to be flexible with this list—definitely take note of which aspects of the house are most important and which cannot be compromised on.

As for the rest, figure out what you’re most ready to sacrifice.  Next start actually looking for a house to buy in newspaper ads, magazines, online and on real estate listing sheets as provided by your agent.  Visit the houses and the neighborhoods they’re in.

After you find something you like and can afford, make an offer for it.  There are various figures you can use as a guide for formulating an offer including how much the seller paid for the house originally, how much comparable houses in the neighborhood are going for, and how big the seller’s present mortgage is. 

You’ll need to order a safety inspection of the house at some point in the process.  Depending on which state you live in this could be before or after the offer is finalized.  The inspection will search for building code violations, insect infestations, problems with the septic system, and other potential hazards.

Sales on houses sometimes go smoothly and sometimes don’t; there are a lot of potential hitches in the process, so you need to keep up with what’s going on even after you place an offer and check in daily on the progress of the sale.  This way you’ll know immediately if something goes wrong, and may even be able to do something to get the sale to resume course again.  Have a backup plan ready if the sale falls through.  It’s good to have several options available.

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