The First 4 Home Buying Steps
Saying Covid-19 has affected every part of our lives is an understatement. One area it has had profound effect on is the real estate market. Mortgage rates are at historic lows which has caused people to flood the market. Luckily the timing was right for me too and I decided to jump into the fray.
Real estate can be a good vehicle to building wealth and diversifying your portfolio. I found though I had no idea on how to go about the home buying process. Now that I understand the process, I’m happy to share my tips below.
Prepare Your Finances: First it is key to calculate how much money you’re comfortable putting towards your down payment. It is advised to put down 20% to avoid PMI but it’s not necessary. You also need to consider closing cost which typically ranges from 2% to 5% of the home’s purchase price. I also recommend utilizing a mortgage calculator online which will help you understand how much a potential mortgage will cost every month.
Prequalification: Once you have a better understanding of your budget, it’s time to get prequalified. You can look up mortgage lenders online and get a free quote by filling in some basic information like your current income and assets. The prequalification letter will let Sellers know you’re serious.
Looking for Homes: Now comes the fun part which is looking at homes. You will need to find a real estate agent online who you trust and understands the area you’re buying in. They will be able to provide listings of homes that fit your budget and set up viewings for you. Once you’ve found the one, they will put in your offer and draw up a contract. From here on out your agent will represent you and help facilitate everything. At this point it would also be ideal to find a real estate attorney. Typically your agent can assist with this.
Applying for a Mortgage: When your offer is accepted, you can apply for a mortgage loan. You will go back to the mortgage companies you researched earlier and compare terms. The Buyer typically has 45 to 60 days to fulfill the purchase contract. A great deal of documentation is also requested at this stage so make sure you have all your information easily accessible.
Buying a home is an exciting experience but it does require some effort upfront. It is important to put thought into what your goals are with your home so you can make the best decision. It also important to find a real estate agent you’re comfortable with because they will make the process much easier. Are there any other beginning steps you would include? I’d love to hear them in the comments below.
