7 Simple Steps to a Smooth Home-Buying Process
Buying a house is a daunting experience. There are so many things involved that you have to take care of if you want the process to be smooth. We call them the 7 simple steps to a smooth home-buying process, and they include:
Your decision when thinking about buying will determine if the process turns out to be a blessing or a nightmare.
Sounds like a suffocating process if we put it that way, but trust me, it doesn’t have to be stressful at all. It can be fun if you get a few pointers right:
Are you ready to buy? What’s in the contract? Knowing what’s in the contract will save you a lot of tears in the future.
A weak financial muscle is a recipe for disaster when it comes to buying your house. Make people find so much joy in house hunting and end up forgetting to check how much they have saved up for the down payment.
Buying a home is one of the hugest purchases you’ll ever make. Make sure you are ready for it financially.
At Unity Star Property Management, we always advise our clients to have enough money saved up. Before you begin the process, it’s ideal to have up to 3-6 months savings that you can fall back on in case of an emergency.
Ensure also that you pay off any or all of your debts before taking the plunge into this big decision. It’s crucial that you are financially ready.
Once you buy a house you have no landlord and any repairs that may be required fall on you. If you have a safety net, you’ll be way better as opposed to when you have nothing to fall back on.
So, how much should you save?
A very question you should consider asking yourself before making the home-buying decision. Three important costs you need to remember are:
Down payment: Put aside at least 10% of the total cost of your home. 20% would be the most ideal because then you can avoid private mortgage insurance (PMI). PMI is the extra cost added to your monthly mortgage and doesn’t go toward offsetting your mortgage balance.
Closing costs: Many real estate ELPs (Endorsed Local Providers) advise clients that they save around 3% of a home’s purchase price for closing costs. However, the percentage can vary depending on how expensive the fees and taxes are in your locale.
Moving and other expenses: this too will vary depending on how far you are moving in regards to your current location. You should call a moving company in your area for a quote; this will help you in budgeting for the move.
The best way to buy a home is with cash. If that doesn’t work for you, then you’ll need a home mortgage loan.
For the home mortgage loan to push through, you’ll need the intervention of a lender. The preapproval process takes some time and work. The lender will have to verify your financial information before submitting for preliminary underwriting. The trick always is to do a thorough home search as this shows that you are a serious buyer.
Can you then tell the right mortgage option for your home-buying needs?
Don’t let bad financing turn your biggest asset into a liability. Instead, set your boundaries to make finding a home you love and within your budget a walk in the park.
We recommend the following guidelines:
A fixed-rate conventional loan: With this, you know that your interest rate is secure for the life of the loan; it protects you from any rising rates.
A 15-year term: A 15-year term mortgage is a loan with a constant interest rate throughout the whole duration of the loan. The pros of this type of mortgage loan are that it involves a predictable monthly payment and you don’t have to worry about the rate fluctuation. The downside is that it’s very difficult to qualify for this type of loan.
A monthly payment that doesn’t exceed 25% of your monthly take-home pay: This kind of option helps you plan your budget month in month out. You will then know how much you are left with, what you can use and what you can save for retirement or towards your kid’s college fund.
You can start your search for your perfect home online; go beyond the internet. Read magazines and newspapers. However, remember, you can only do a lot of research on your own, but you need the help of an expert when it comes to finding the perfect home.
Your agent will help make the home-buying process easy peasy. They will even help you find a home before it hits the market; this will give you an edge over other house hunters like yourself.
What’s the cost of a real estate agent?
A real estate agent is free to you since the seller pays the fee. This said you need to perform your due diligence to ensure that you get the right agent. Look for the following qualities in him or her:
An exceptional agent will even help you in negotiating the contract to ensure that you get the best house in the market.
The tough part of finding your perfect is out of the way now comes the sweet and fun part, House Hunting.
Having a rock solid financial muscle and an exceptional real estate agent is your perfect combination of buying a home with confidence. Go ahead and make a list of home features you’d want. If you are buying the house with your spouse ensure that both you have your separate lists that you’ll then compare. Remember to be realistic with your expectations as you go through your list.
Here are a few things you need to consider as you hunt for the perfect home:
Location or layout: Nothing or no amount of tweaking of the house will change the bad floor plan or the fact that the house is in a bad neighborhood. Buy a house you believe you could easily sell years later. If you don’t love it, trust me no potential buyer will.
Look beyond the surface: Don’t let anything small that could easily be fixed keep you from an otherwise great house.
Buy the least expensive home in the best neighborhood you can afford: The value of your home will appreciate and will give you better returns when you decide to sell in the future.
Pay close attention to home values in the area you are interested: What’s business like there? What’s the community like?
Research the school districts: this might come in handy even if you don’t have kids now.
Once you’ve spotted the perfect home, the next step is to submit an offer with the help of your agent, of course!
In an instance where you are bidding for the same house with several other buyers, remember to remain level-headed. Also, make a point of knowing what is included in your buyer agreement.
Ensure the agreement contains the following:
Negotiations can get tough, but always know that both parties want the same thing; sometimes they have to disagree to agree. If your agent is good, they’ll always advise you when to give in and when to hold your horses.
Don’t skip this contingency because it offers important protection for your home purchase. A professional home inspection will help avoid expensive repairs and can also help you determine the age of the home you are buying that way you’ll know if you got the best value for your money.
An appraisal, on the other hand, protects you from paying more than the homes true value.
You have done all the necessary planning and house hunting, it’s finally time to close on your new space.
Paperwork is now the final part of the journey to getting the keys to your house. Ensure that you have had enough time to review the closing documents well ahead of time. You’ll probably pay for the following:
Put all these 7 simple steps to a smooth home-buying process to the test; you won’t be disappointed.