Homeownership is one of the most sought-after dreams of U.S. citizens. But purchasing a house requires a lot of effort and time. Without receiving thorough information, homebuyers often end up making huge mistakes.
When making a decision about housing, there are certain steps that a homebuyer must follow. These steps ensure that a homebuyer does his proper research on available housing, explore the different home loan options available, and end up purchasing a house that he actually dreamed of.
Here are some steps that you can take to make your home buying process more successful and manageable.
- Gathering Information on Available Housing
The first step when making a decision about housing is to get useful information on available housing in the areas where you are most interested to buy your new home in. Do a thorough research, go through real estate listings [hyperlink to the listing page] on different websites or see the newspapers that have listings.
Make notes of any particular homes that you are interested in. Also, observe the asking price and see how they vary for different house types. This will give you a better idea of real estate trends around you.
- Determine How Much House You Can Afford
Typically, lenders recommend that homebuyers look for homes that cost no more than three to five times their annual household income. Moreover, it is advised that homebuyers put 20% down payment, as it will get them a Mortgage Loan with affordable terms.
So, look for the sale prices of the houses that you like and see if you can pay 20% of that amount upfront. Remember that the final decision should be based on your individual financial situation
- Decide on Type of Home and Location
Once the home buyer knows how much house he can afford, it is time to look for the location and the type of home he/she wants. Often, people choose the location of their homes based-off of factors like work and family. But, it is important that you look at all the available options including the urban and suburban areas. This will give you a lot of different choices and you might end up finding a really good home at a cheaper price.
The type of home is another important factor that needs to be considered when making a decision about housing. Home types include single-family detached homes, town homes, condos, semi-detached homes and duplex homes. What type of home would be more suitable for you depends on your personal needs and the lifestyle you have.
- Get Pre-approved or Pre-qualified
Before a person begins the process of home buying, homebuyers need to know how much they can afford. Usually this comes down to how much home loan they can obtain. One way to do this is to get pre-qualified. The pre-qualification is a process in which a mortgage lender interviews the home buyer and asks about their individual financial situation. At the end of the interview, an estimate of how much loan amount the buyer can obtain is given.
A pre-approved is another option available for the buyers. For a pre-approval, a credit check is run on the borrower and the amount of available down payment is taken into consideration. Based on the borrower’s credit situation and other personal debts, an estimated pre-approved amount is granted to them. A pre-approval is typically favored over a pre-qualified.
- Find the Real Estate Agent
Either you are buying or selling a home, a good Real Estate Agent will provide significant help. Although they are not always a necessity, experienced agents can play a vital role in getting you, your dream home at a reasonable price. They can provide the homebuyers with valuable information on houses and neighborhoods that is not easily available to the public.
An agent understands the real estate market, knows how the negotiations work in real estate and lead its clients to the houses that they really want to see. This helps homebuyers in saving a lot of time, money, and efforts. Choose a Real Estate Agent [hyperlink to the agent page] that has good reputation in the area and knows the neighborhood well.
- Visit the Available Properties and Make an Offer
Now that you have decided your home type, location, budget for your new home and have found a Real Estate Agent, it’s time for you to visit the available houses in your shortlisted areas. It will probably help you to take notes for every open house that you visit, write everything that you like or dislike about a particular house. Make sure that you check every little detail, for example, electricity system, sewer system, sunlight, windows, kitchen cabinets, faucets, and so on.
Take as much time as you need to find the right place for you. Keeping notes will help you see better the pros and cons of a particular property. When you think you have found your desired place, work with your lender to negotiate a fair deal with the seller. Your agent can really help you here as he will base the offer price off of comparable homes that have recently sold in the area. The agent will draft a contract that is agreeable to both the seller and the home buyer.
- Analyze the Availability of Housing Loans
Lenders have a wide range of competitively priced home loans. It is important that you choose a reputable mortgage lender, who not only offers you a reasonable mortgage price but also has an exceptional customer service. You will have to deal with your mortgage lender for the coming 15-30 years, so it is wise that you take your time to find a good one.
Once you have found a good mortgage lender, the next step is to find a mortgage option that best fits your budget. You will need to discuss with your lender in all honesty about your financial situation and how much monthly mortgage payments you can afford. Your mortgage lender will then devise a mortgage plan for you accordingly.
- Have the Home Appraised
Lenders require a home appraisal to get an independent estimate of the fair market value of the home you are purchasing. The appraisal is done by a licensed appraiser from a third party who is directly associated with the lender or the seller of the property. An appraisal tells all the parties involved that you are paying a fair price for the home you are purchasing.
- Coordinate the Paperwork
There is a lot of paperwork involved in buying a home and closing a mortgage deal. Your lender will arrange a title company to take care of the paperwork involved and will make sure that the seller of the property you are buying is the rightful owner of it.
It is best that you stay in touch with your lender at all the times during the paperwork process so that it can get done quickly and you can close the deal.
- Close the Sale
At the closing of your house, you will sign all the paperwork that is required to complete the purchase process. Typically, it takes 2-3 days for your loan to be funded after the paperwork is returned to the lender. And once the check is delivered to your seller, you can move into your new home!
Affiliated Mortgage is a trusted mortgage lender and real estate search with their head office in Rapid City, SD. We have a number of experienced and skilled Mortgage Experts and Real Estate Agents in our team, who can really help you in finding your dream home at the lowest available mortgage rates. Contact us now to get pre-approved.
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