Step 1 – Figure Out What You Can Afford
The first step in the home buying process is determining a budget that works for you. The general rule of thumb is your home expenses should be around 29% of your monthly gross income and the home price should be 2 to 3 times your annual income, but it really comes down to finding a number that your comfortable paying for 20 to 30 years.
Step 2 – Make Sure Your Finances and Credit are Solid
What kind of loan and interest you qualify for is determined by your credit and current financial state. The better shape you are in financially will help you get a lower interest rate and save you money. Check your credit, don’t make any major purchases and pay your bills on time.
Step 3 – Determine Which Loan is Right for You and Get Pre-Approved
There are many loan options to choose from and if you’re not familiar with loans and the process, it can be overwhelming. Start shopping loans to see what options make sense for your situation. Is this a short-term home or do you plan to be there forever? Can you do a 15 year vs a 30 year mortgage? Take your time and interview lenders, it’s important they answer all your questions and you feel comfortable with their product and service. Your agent should be able to refer you to a lender they have worked with, know and trust. It’s in your best interest and the agent’s too for your loan to go through its process smoothly, so talk to your agent about any recommendations before deciding on a lender.
Step 4 – Start Saving for Down Payment and Closing Costs
Depending on the type of loan you choose, you may need to come up with the money for the down payment and the closing cost associated with buying a home. If you can put 20% down, you’ll be able to qualify for more loans, have a lower mortgage payment and a better interest rate. Your agent should provide you an itemized estimate of closing costs, so there are no hidden surprises at closing.
Step 5 – Decide on What Type of Home is Right for You
Do you want something low maintenance where the grounds and exterior are taken care of for you like a condo or townhouse? Do you have a family or plan to have one and want to live in home that’s zoned for schools you want your children to attend? Do you want to live in a neighborhood that’s deed restricted or do you want leeway to express yourself? Answering these questions will help narrow your search and you can research what homes are available that meet your criteria. We suggest you sign up for free email alerts, so you are notified when properties become available or price changes on existing listings that meet your budget.
Step 6 – Start Looking at Homes
This is fun part of the home buying process, start looking at homes with your agent. Take your time and don’t make any quick decisions. Talk with your significant other or trusted friend or family member and ask for their candid objective opinion. Don’t be afraid to tell your agent you want to see a home again, your agent understands it’s a huge decision and they want to make sure you purchase a home that makes you happy.
Step 7 – Put in an Offer
Work with your agent to determine a competitive offer based on current market conditions. Ask your agent if you think the seller would be willing to offer any incentives like a home warranty or set aside money in escrow for home improvements. Depending on the seller’s motivation and situation, they may be willing to give concessions to close the deal.
Step 8 – Closing and Signing of Paperwork
The final step of the home buying process is the closing date and signing the paperwork. The closing is typically done at the title company’s office. The title officer will explain each document, but if you have questions, make sure you ask, so you clearly understand what you are signing. After both parties have signed the paperwork, you’ll be handed the keys to your new home and you can start moving in or making renovations to fit your style!
Buying a home is a big decision and commitment. Finding an agent that knows the home buying process and has your best interest is imperative. Read reviews and testimonials, make sure your agent is in good standing with the Better Business Bureau (BBB) and interview agents to make sure it’s someone you trust. Contact a Great Blue agent for more information about buying a home.