Buying a home is one of the most effective ways to build wealth for people in the United States. It’s also a smart move for those who would otherwise be renting, considering the fact that mortgage payments tend to be considerably lower than rent bills.
Finally, it’s nice to have a place that you can call your own. There’s a lot of thought and planning that goes into closing on a home, though. We’re going to discuss the process of buying a home in this article, going into some depth about what you can expect as you start.
Let’s get started.
The Process of Buying a Home Explained
Let’s assume that you’re at square one. You’ve made the determination to start thinking about how you can own a home in the next year or two.
The first thing to do is figure out just how much you can afford. It’s not on you to make that decision, though. The person who determines what you can afford is whoever your lender is.
In most cases, a bank will provide you with a mortgage that you pay back over time. They look into your income, your credit score, and a number of other factors to determine your creditworthiness.
Before you start searching and undergoing the process, you need to get pre-approved for a mortgage. Mortgage pre-approval lets you know what price range of homes you can look into.
Get pre-approved once you’re confident that you’re going to buy a house, and you can have more direction as you go about the rest of the process.
Start Browsing the Market
You’ve probably perused a little bit already, and that’s great! The searching phase of home buying is important, and it shouldn’t come to an end too quickly. Browse different listings for as long as you need to.
The more you watch the market and the homes in your area, the better idea you’ll have of what you’re interested in. Moreover, you’ll have a good idea of what the values of different features are.
The more insight you gather from looking into the market, the more effective your time with a real estate agent will be.
Find an Agent to Work With
Reach out to a real estate company or two and try to find an agent that you work well with. It’s important to have a decent relationship with this person because a significant chunk of your financial life sits in their hands for a while. At the very least, they’re around to help you find the best deals and avoid any pitfalls that might come your way.
An experienced and trustworthy agent can help you close a deal on homes that you might not see online, or inform you on offers to make or options that you have. In most cases, agents are paid on commission from whoever is selling the house, so they’re interested in finding you a great home otherwise they don’t get paid.
Get an Inspection Before You Sign the Papers
Once you’ve found a place that you’re interested in buying, make sure that you hold off on pulling the trigger until you’ve had a home inspection.
It’s not rude or out of place to have an inspection before you sign any paperwork. It’s the smart thing to do, even if the seller has already confirmed that there are no issues with the property.
Having things checked out gives you confidence that there aren’t any issues that will come up later. In a lot of cases, those issues can cost you thousands upon thousands of dollars. Problems with the structure of the home, details of the roofing, or past damages that were covered up can all lurk in the corners unnoticed.
If there are some discrepancies with the value of the home in relation to the findings of the inspection, you can negotiate those things with the seller. You might ask that they fix the issues before you sign, or you could negotiate a lower price if you’re willing to have the damages fixed yourself.
Get Your Own Appraisal
Another thing to do is get an appraisal from someone you hire. The home will have been appraised before it was put on the market, but all of that process goes on without you in mind.
Sellers want to get the most money for their property and buyers want to spend as little as they can. That’s the way it is. That’s not to say that people are dishonest, but there are significant financial interests that can produce small biases throughout the process.
Getting an appraisal on your end helps to ensure that the value of the home is exactly what you’re paying for it. This helps you save money now and appreciate value over time as the home gains interest.
If you gain a large chunk of equity on the home, it’d be a shame if that value was canceled out because you paid more than the house was worth in the first place.
Explore Your Morgage Loan Options
You have a number of options available to you when it comes to selecting a loan to work with. Lenders might have options that they prefer to use, but you always have the availability to ask for different features that will lower your payment and extend the life of the loan.
Keep in mind that extending the life of the loan doesn’t necessarily mean that you’ll have to pay on it forever. That is if you ever plan on selling or refinancing the home.
Refinancing is the process of appraising the home and taking out another mortgage that eclipses the previous one. So, if your home is grown in value, you’d get the difference in your pocket and have the option to rework your mortgage.
Want to Learn More about Homebuying?
The process of buying a home might seem stressful, but it leads to the experience of having your own space to do with what you like. Owning a home is well worth the slight stress of going through the process of buying one.
We’re here to help you with more information. Explore our site for more ideas and insights into how you can buy your first home.