Buying a home might not be as easy as 1,2,3- but it just might be as easy as 1-1o. While a variety of factors can affect the ease and timing of your transaction, a few basic steps are universal for most homebuyers during the initial stages of a purchase.
- Determine your readiness: If you’re reading this, it’s likely that you’ve already tackled the first step of deciding whether purchasing is a good option for you. Obviously, your current financial situation will be a major factor in the decision. Understanding the cost of home buying and home ownership are vital steps. It can help in determining whether you’re ready to “take the plunge”. Factors that determine your financial readiness include your current income, savings, fixed expenses, and debts.
- Become an Optimal Mortgage Candidate: With lender requirements stricter than ever, you’ll need to make sure your credit and finances are in excellent condition. Try to pay off or pay down outstanding balances on credit cards, car loans, etc. This will help improve your income to debt ratio, which will in turn improve your credit score. A credit score higher than 700 will get you the best rates
- Get a pre-approval letter: Getting pre-approved means that a loan officer has reviewed the client’s finances and believes they qualify for a specific loan amount. The lender well then offer you a pre approval letter. This will be a testament to your buying power when you are ready to make an offer on a home
- Determine your budget: This is a very important step. Your preapproval letter will tell you how much the bank is willing to lend you based on your credit, income, and other factors. But how much you can really afford is a personal decision. The bank will take your fixed expenses into consideration when determining your pre approval amounts. However, you will need to determine what you’re comfortable spending each month.
- Call Reyes Signature Properties: While you don’t have to use an agent to purchase a home, it can make the entire process much easier for first time homebuyers. We know that the process of buying a new home can be scary and stressful but it doens’t have to be. Here at Reyes Signature Properties, we are here to make the home buying expereince as simple and stress-free as possible.
- Select a property: with your real estate agent (or without), narrow available properties by determining what you really want in a home. Your agent will help arrange home viewings for properties that suit your preferences. Once you’ve selected the right home, it’s time to make an offer and close the transaction.
- Make an Offer: Placing an offer can be a delicate process. The current market condition, time of the year, work needed on the home, and the length of time the home has been on the market can all affect your offer – not to mention your own budget. The price is not the only factor within an offer, either; you can also negotiate closing costs, necessary repairs, etc.
- Inspect the home: Once an offer is accepted, it’s customary to schedule a buyers home inspection. This is when you have the opportunity to get a professional opinion on the condition of the home and determine any red flags. These red flags could be things like damage, pests, structural issues, etc.
- Sign a purchase agreement: The sales contract, or purchase agreement, will outline these specific directions of the transaction. This contract will outline the details of the sale, negotiated repairs to be made prior to close, fixture solds with the house, certain disclosures of the property, etc. This, along with the payment of earnest money, will be held fire attorney or escrow officer, depending on your geographic customs.
- Close the Transaction: The process of closing on a new home can require several weeks (or longer) and many steps. During the escrow., you will work with your lenders to secure your mortgage. This process will involve gathering a wealth of financial paperwork as well as arranging a lender’s appraisal of the property. During the closing, your lender may require you to purchase a policy of homeowners insurance. You will have the option to purchase an owners policy of title insurance. When the requirements of the purchase agreement are fulfilled and the mortgage is approved, there will be a final walkthrough of the property. This will determine that all repairs were made as negotiated. On the closing date, you will sign your mortgage documents and receive the keys to your new home.
*Information provided courtesy of First American Title