Following a step by step guide can help alleviate the stress and confusion associated with the home buying process.
When taking actionable steps towards purchasing a home, make use of a home buying process checklist for optimal results.
There are still ways to get approved for a home loan, even for those with bad credit.
The home buying process is a considerably high-stakes endeavor, especially for first-time home buyers. According to the National Association of Realtors, buyers under the age of 36 have made up the largest proportion of home buyers in the U.S. over the last four years. Of this proportion, 66 percent of the buyers purchased a home for the very first time. Whether you are a first time home buyer or someone in need of a refresher, this comprehensive guide to the home buying process is just for you.
Process Step By Step
The home buying process can take someone anywhere from just a few weeks to several months, depending on factors affecting inventory, or their level of pickiness or budget, while sometimes it just comes down to luck. For starters, future home owners should kick off the process of buying a home months in advance with the research phase:
Start your research now: If the possibility of buying a home is on your mind, it’s a good idea to start conducting research early. Reading articles on the home buying process can help you set financial goals, while perusing real estate listings can help you get an idea of what type of property you can afford.
Find out what you can afford: Once you have a general idea of the type of home you’d like to buy, the next step is figuring out how much house you can afford. Use an interactive mortgage calculator, such as the one offered by Zillow, to get a better idea of what the purchase price, down payment and mortgage payments might look like.
Get pre-approved for a mortgage loan: Although you can estimate how much house you can afford, a traditional mortgage lender may have a different opinion. By getting pre-approved for a mortgage loan, you will get a definitive answer for how much a financial institution will lend you. For this process, be prepared to submit copies of your financial documents.
Get to know real estate agents: Enlisting the help of a real estate agent can make your search much easier. According to the National Association of Realtors, 88 percent of all buyers in 2017 purchased their home through an agent. A good real estate agent will inform you on the home buying process and provide their expertise on local market trends. In addition, they will connect you with listings within your price range that best suit your needs, as well as help negotiate the purchase price.
Find your dream home and make an offer: You can find for-sale properties through listing websites, local publications and your real estate agent. Start touring homes to develop a sense of what you want and don’t want in your home, as well as what type of inventory is available in your desired neighborhood. Once you find a property that meets your needs, work with your agent to negotiate a fair price with the seller.
Get your property inspected: Once the property enters escrow, the purchase should be contingent upon it passing a home inspection. Once your offer is accepted, arrange to have an inspector visit the property and identify anything that needs to be fixed. Both you and the seller should receive a copy of the inspection report, after which you can renegotiate with the seller in case anything needs to be fixed. In worst cases, the contingency also protects you in the event that you would like to withdraw your offer.
Work with your lender: Next, sit down with your lender and determine the type of mortgage loan that best suits your financial goals. For example, you may be interested in having the lowest possible monthly payment, fixed payments over time, or perhaps a loan best fit for selling the property in just a few years.
Schedule a home appraisal: After you have been approved for a mortgage loan, your lender will arrange to have a third party company to appraise the value of the property. This process is in the best interest of you and your lender, to ensure that they are providing a loan for a property that has been priced fairly.
Work with a title company: The home buying process will result in a large stack of legal and financial paperwork. The mortgage lender will usually make arrangements for a title company to manage the paperwork process, through which they will make sure that the seller is the rightful owner of the property.
Close the deal and get the keys: Once the sale is finally closed and all the purchase paperwork is signed, the property will finally be yours. Once the seller receives the check, you will receive the keys to your new property.
How Long Does The Home Buying Process Take?
The home buying process can take anywhere from one month to a few years, depending on the unique experience and expectations of the home buyer. On average, a home buyer can spend one to two months searching listings, several weeks to negotiate and close a deal, and then make the first mortgage payment several weeks after that. With these variations in mind, a home buyer can realistically expect for the home buying process to take roughly three months.
Home Buying Process With Bad Credit
Having bad credit is not an uncommon problem for Americans, and it should not discourage you from the home buying process. Saving up for a larger down payment of 20 percent or more will be required with anyone with a credit score below 580, to help demonstrate that you will be able to manage a mortgage. Those with a credit score above 580 can qualify for a Federal Housing Administration (FHA) loan, with a down payment requirement of 3.5 percent. Home buyers can also consider taking out a private loan, but should be prepared to pay high fees and interest rates. Finally, taking out a conventional loan is still possible if you are able to demonstrate financial stability, and that you will be able to manage mortgage payments.
Home Buying Process Checklist
Once you have researched the home buying process in detail, the next phase is to take actionable steps towards your goal of becoming a homeowner. The home buying process is no doubt a long and arduous process, and it is possible that you will experience some setbacks along the way. At times like these, a helpful home buying process checklist will prove to be helpful:
Know your numbers: Now that you’re ready to buy a house, now is a good time to re-calculate how much house you can afford, using your updated financial information. Also re-examine your FICO score to make sure you have your target credit score.
Save up for a down payment: In today’s market, lenders require anywhere from 3.5 percent to 20 percent in a down payment. If you do not have enough cash saved up, set realistic targets to hit each month until you have saved up enough.
Do your homework: Make use of the countless resources that offer free information on the home buying process, such as lender requirements, a list of documents to prepare, and how mortgage payments work.
Interview real estate agents: Purchasing a home is a big, important commitment, and you are entitled to find a great real estate agent. Ask friends, family and coworkers for referrals, and start setting up meetings with agents to identify the one who can best serve your needs.
Research mortgage types and lenders:Mortgage loans come in all shapes and sizes, as do the lending institutions that provide them. Start your research early so you can identify a ledner you can trust.
Estimate closing costs: It is easy for buyers to forget, or be completely unaware of, closing costs that must be paid at the end of the sale. Home buyers should budget for three to six percent of the purchase price.
How Can I Get Approved For A Home Loan?
You can get approved for a home loan by completing a mortgage application. Be prepared to provide proof of your financial data, such as your monthly income, total debt payments, and your credit score. Also, have an idea of how much house you can afford, as well as how much cash you have available for a down payment. Meeting with a mortgage lender before you are ready to purchase a home can also help you set financial goals, such as knowing how much to save up for a down payment, or improving your credit score.
It is no secret that the home buying process can be tricky, and can be especially daunting to navigate for first-time home buyers. Those who remain vigilant in conducting their own research, tapping resources and paying attention to detail, are sure to be rewarded with owning the home of their dreams.
Author:Marilyn Cortez Phone: 956-587-1633 Dated: December 3rd 2018 Views: 259 About Marilyn: Always ahead of the highly competitive RGV real estate market, Marilyn Cortez is a Spanish speaking ...
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Always ahead of the highly competitive RGV real estate market, Marilyn Cortez is a Spanish speaking native of the Rio Grande Valley. Born and raised in Mission, Marilyn is committed to her clients, and is recognized as a Top Agent in the Greater McAllen Real Estate area, and within Keller Williams Realty. Since the start of her Real Estate career in 2007, she has sold over 40 million dollars of real estate. Known by her fellow real estate agents to be hardworking, honest, dedicated and motivated, Marilyn is knowledgeable in all areas of Real Estate and has built her business on results, with more than 70% of her clients being repeat clients.
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"Marilyn was great! She was very personable and always available to discuss my needs and concerns. I was a first time home buyer and she made me comfortable throughout the whole process. If I had to do it all over again, I'd definitely pick Marilyn and I recommend her to everyone I know!"