Once you’ve considered your circumstances and decided that homeownership is the right move for you… be prepared for the requirements and nuances of the buying process.
Here is an overview of the typical steps involved…
Step 1 – Check your credit
If you’ll need financing, you need to be aware of your credit score. Know your rating, which is typically anywhere from 350 to 850. A higher score indicates a lower risk to a lender and you are likely to receive favorable financing terms.
You’ll be able to receive a free copy of your credit report, once per year. Annualcreditreport.com is a great resource and is explicitly authorized by Federal Law to provide credit reports to the public.
There are 3 credit reports available, from the three nationwide consumer credit reporting companies – Equifax, Experian and TransUnion.
Each have their own credit scores, and they all may all differ. So it’s definitely smart to check your credit regularly and make sure all information is updated and accurate. Learn more about your actual credit score and see how it is affected.
The 5 main components to a credit score:
- Payment history: 35%
- Amounts owed: 30%
- Length of credit history: 15%
- How many types of credit in use: 10%
- Account inquiries: 10%
Step 2 – Know how much you can afford
Use an online mortgage calculator to figure out how much you can afford for monthly mortgage payments.
Two good options are: http://www.mortgagecalculator.org/ or https://www.zillow.com/mortgage- calculator/
You will also need to factor in the following expenses:
- Down payment (20% is not always the rule and loans are available with little or no down payment)
- Closing costs (escrow fees, appraisal, inspections, etc.)
- Remodeling costs
During the buying process you can expect your real estate agent to put you in touch with the right mortgage lender to understand all the loan options, closing costs and fees.
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Step 3– Find the best real estate agent for you
If you are truly ready to move forward and buy at this point, you’ll need search for the best agent for you. This likely means choosing a home buyer specialist or “buyer’s agent.” We’ll go into much more detaillater on. But your focus should be on a Realtor® who works with people similar to you and always puts their clients first!
Take your time and learn the right questions to ask and signs to look for in an agent. Working with the right agent will simplify the process and will make everything go smoothly. This is crucial to your success and happiness in building your retirement lifestyle.
The agent will also help you work with the right Mortgage Lender (if needed). You should get a “pre-approval” to know how large a loan you are qualified for and know your purchasing power before searching for homes.
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Step 4 – Searching for the perfect homes
Start with your own homework and know what you want. Analyze your wants and needs with your agent
Be ready with a list all your “non-negotiables” and “must-haves,” the features important to you in the community and in the home itself.
Visit and evaluate the matching candidate homes together with your agent. Understand all the aspects of the homes that best fit your needs. With the help of the agent, rank each of the homes you visit to find the best choice.
Step 5 – Making an offer on a home
Prepare a fair offer by evaluating comparable properties and include key elements of the offer including: price, deposit amount, closing dates and subject clauses or contingencies to be met.
The agent will do all the research and prepare the formal offer (legal contract of purchase & sale) and will also present and negotiate the offer on your behalf.
Step 6 – Make arrangements for home inspections
Typically after offer acceptance is the time for deeper due diligence on the home – a closer examination of the safety, defects and potential repairs. Your agent will help you make all arrangements for any necessary additional inspections.
Step 7– Confirm your financing (if needed)
You can also get an actual loan approval before you start the home search. This helps the sale go through quicker once you make an offer… and you’ll be more appealing to home sellers since the financing isalready guaranteed.
Otherwise, a mortgage broker will help you get the right mortgage, evaluating the best loan options, specifying closing costs and confirming that the funding is in place for closing on the home.
Step 8 – Closing the deal
After home inspections are finished, financing is in place and any contingencies are met, the closing documents are completed. Then closing date is set and money and title are exchanged.
Step 9 – Move in
The buying process is officially finished – the day you’ve been waiting for! Now you can take finally possession of the home…enjoy unpacking your things and making it your home!
And also, if you need help with a mover, your agent can help you there too.