By law, you are allowed to receive a free copy of your credit report annually (www.AnnualCreditReport.com). Be sure you check your report for any errors. If you identify any errors, be sure to dispute them as it will likely help raise your credit score. Please Note: By personal observation, using www.CreditKarma.com is not reliable as it seems the credit score is exaggerated (higher than reality).
A mortgage calculator (like the one on the Home Page of this website) can assist in your calculation of an affordable mortgage payment. Be sure you factor the money you will need for a down payment, closing costs and fees (appraisal, home inspection, etc.), and the cost of new furniture or home improvements.
It is highly recommended to complete this step before searching for a home. There are several reasons:
Good news: Gone are the days where a 20 percent down payment was mandatory. Loans with lower or no down payments are available. Please seek the advice of an experienced home loan expert to see what your options are.
A quality real estate professional can make the difference between a smooth transaction and a nightmare for your home buying experience. Seek out a professional with a strong work ethic and one you can get along with and be comfortable.
Identify all the amenities the home of your dreams should have:
When your list is complete, the next step is to identify the neighborhood you want to live in, the school system in that area, your commute time to work, and local shopping convenience.
Woohoo! You found the home of your dreams! Now it’s time to make an offer. Many sellers list their homes a bit on the high side as they expect there will be a negotiation in the final sale price. In this case, a good rule of thumb would be to submit a purchase price of about five percent below the listing price. However, an experienced real estate professional will know for certain whether the list price is reasonable by providing a list of what comparable homes in the area had recently sold for. When you have made your offer, the seller will likely provide a counter-offer. You can either accept their counter-offer or you can submit a counter to their counter-offer. Be careful to not go back and forth too many times as the seller may just say “no” instead of keeping the negotiations going. When an agreement on a purchase price has been reached, you will provide a deposit (called an “earnest”) which will go into an escrow account. This will assure the seller you are serious about the purchase of the home.
There are several different mortgage programs from which to choose. The three basic types of mortgages are: fixed rate, adjustable rate, and interest-only:
It is highly recommended to get a home inspection within 10 days of the signing of the home purchase contract. This will be money well-spent as it will give you piece of mind that your new home’s structure is sound and everything is in working order. It can be a bit difficult (but not impossible) to set a closing date that is convenient for all parties involved. Perhaps you’re waiting for your rental agreement to expire or the new home the seller purchased will not close on the day you want to close. Your mortgage company can break down all the costs associated with the closing. Some of the closing costs will include:
Whew! Everything went well at the closing. It is now time to move into your new home! Do you need a mover? Well, it depends on the amount of personal belongings you have or your financial situation. Or maybe you have a lot of friends that will help you move. Whatever your situation may be, the home buying process has come to an end. All you need to do now is unpack and enjoy your new home!