When you know what to expect, your home buying experience can be a joyful time. However, if you go in blind, you might find yourself frustrated, stressed, and confused. Purchasing real estate is a significant commitment, a time-consuming endeavor, and a painstaking process. However, homeownership is one of the most positive rewards of living the American dream; it’s worth it. Here are the six steps to buying a home.
💵 Home Down Payment
Typically, buyers put forth twenty percent of the value of the house they’re buying as a deposit, and then borrow the remaining 80 percent from the bank in the form of a home mortgage loan. For example, if you were buying a home with a sales price of $200,000, your standard down payment would be $40,000.
In addition to the down payment, buyers are responsible for closing costs, which is an additional two-eight percent of the value of the property, so in the $200,000 example, you could add on another $16,000 to anticipate the high end of closing costs.
But not everyone has $56,000 ready to invest in buying a home. There are loan programs available such as FHA or VA loans that can ease the weight of the down payment, closing costs, or both.
💲Knowing Your Credit Score
Traditionally, financial institutions measure your credit score and your debt-to-income ratio as determining factors in whether or not you qualify for your home mortgage loan.
Credit Score: Your credit score demonstrates to the lender your ability to borrow and repay money from lenders as agreed upon without delinquency or default.
Debt-to-Income Ratio: Your debt-to-income ratio measures the amount of money you bring in through income and additional sources against what you have going out for expenses, including the house you’re buying. This is to satisfy the lender that you’re not over-extending yourself financially by borrowing more than you can repay.
📝 Pre-Approval for the Home Mortgage Loan
Pre-approval for the home mortgage loan establishes you as a qualified buyer and determines your home buying budget. Pre-approval also expedites your real estate transaction by completing that step before submitting an offer on the house. Additionally, pre-approval sends a signal to the real estate agents that you’re ready to take action, and it sends a clear message to buyers that you’re serious and able to move quickly.
👥 Finding the Right Real Estate Agent
Take the time to research and interview real estate agents to find the right agent to satisfy your needs. Real estate agents vary not only in their rates, but also in their contracts, terms, and personalities. Research agents online, read their reviews, check out their ratings, and ask any questions you may have to determine whether or not the agent communicates in a way that resonates with you.
🏠 Home Listings and Offers
Your real estate agent will help you refine your wish list so its realistic to your budget and location, and then will show you properties until you find one you find worthy of an offer. Do not emotionally attach to the house until you have the keys. Anything can happen that could nullify the deal. When the seller accepts your offer, the transaction is ready to move to the next step: practicing patience.
📄The Home Buying Process
Many things have to happen between now and closing day, including an appraisal, inspection, and survey. The title needs to be checked and transferred, and all the paperwork needs put in order and signed. These processes take time, so be patient. Be sure to talk with your real estate agent about any questions you may have so you understand what’s taking place while you patiently wait to move into your new home.
Make sure you’re prepared financially and that you’ve got your credit and debt-to-income ratio in good standing. Stay ahead of the game by obtaining pre-approval for your home mortgage loan before you begin shopping for houses. Interview real estate agents and find the best agent to suit your needs. Enjoy the process of shopping for houses with a realistic wish list, and be patient with the processes. When you’ve educated yourself ahead of the game, you can fully prepare for the experience and enjoy the process of becoming a homeowner.
Your real estate agent is the best source of information about the local community and real estate topics. Give The Weinland Group a call today at 210-253-3133 to learn more about local areas, discuss selling a house, or tour available homes for sale.