Americans are on a home-buying spree as the homeownership rate increased to 65.5% in 2020. If you’re ready to buy your first home and join the millions of homeowners in America, congratulations.
Buying a house will be one of the most exciting times of your life. You’re probably wondering about everything you need to do to get yourself ready for the buying process.
While there’s no single right way to handle the process, a checklist for buying a home will come in handy. It’ll ensure that you don’t miss the essential steps when purchasing your first house.
Check out our guide to buying a home to learn tips that will make your first home buying experience smooth.
Determine Your Budget
The first step in buying a house is determining how much you can afford. This step will ensure that you only focus on homes within your desired price range.
When thinking about your budget, you should look at your monthly expenses and cash intake. You can use these figures to calculate your debt-to-income ratio (DTI). You’ll need to divide all your monthly bills by your monthly income.
Most mortgage lenders require you to have a DTI of 43% or less. So make sure that you meet this criterion. Budgeting will ensure that you don’t overspend on buying a home and leave yourself with nothing to spend on other activities
Start Saving for a Down Payment
Once you know how much you can afford, you can start saving up for a down payment. Most lenders will ask for at least 20% of the home’s value as a down payment. But putting down more money will help you avoid paying private mortgage insurance (PMI).
If you can’t afford to put 20% down, there are alternatives. You can look into government-backed loans like FHA loans. These require as little as 3.5% for a down payment.
You can also ask the seller to pay some of your closing costs. This can help you reduce the amount of money you need to bring to closing.
Find a Mortgage Lender and Get Pre-Approval
Getting pre-approved for a mortgage is different from being pre-qualified. The latter is when the lender gives you an idea of how much they’re willing to lend you based on your financial situation.
When you get pre-approved, the lender will thoroughly analyze your finances and tell you how much they’re willing to lend you. The analysis will give you a better idea of how much house you can afford.
Sellers are more likely to accept your offer if you have a pre-approval letter from the lender. If you need a reliable mortgage lender in Sacramento, consider United Wholesale Lending. Read more about this company to see why it is your best choice.
Find a Real Estate Agent
No matter how much you think you know how to buy a home, having a real estate agent by your side will make everything a breeze. The agents have an in-depth understanding of the home buying process. They’ll help you find a home that matches your budget and preferences.
An experienced real estate agent will know how much similar houses in the area have sold for recently. They’ll also be familiar with the neighborhoods you’re interested in and can tell you about the amenities in the area. You should do your due diligence to hire the best real estate agent.
Search for a Home
Looking for your first home can be overwhelming. One of the crucial tips for first home buyers is to rely on a real estate agent when searching for a home. The agent will consider everything that you might overlook, such as the availability of schools and security.
The agent will also understand whether the house has been on the market for a long time. If so, they might be able to convince the anxious seller to strike a deal at a lower price.
You can use online listings to get an idea of what’s available in your area. You can also drive around neighborhoods you’re interested in and look for “For Sale” signs. Once you’ve found a few homes you like, you can ask your agent to help you narrow down your options.
Make an Offer
After you’ve found the perfect home, it’s time to make an offer. Your agent will help you come up with an offer that takes into account how much similar homes in the area have sold for recently.
The agent will also consider how long the house has been on the market. They’ll also determine whether the seller is motivated to sell.
You should also be prepared to negotiate. If the seller counters your offer, you can decide whether you want to accept their counteroffer or not.
Get a Home Inspection
Even if the home seems perfect, it’s crucial to get a home inspection before you buy it. The inspector will point out any problems with the house and give you an idea of how much it will cost to fix them.
You can use the inspection report to renegotiate the price of the home. You can also ask the seller to make repairs before you close the deal.
If you’re buying a newly built home, you might not need a full home inspection. However, you should still hire a professional to do a walkthrough of the property.
Close on the Deal
Once you’ve negotiated the price and passed the inspection, it’s time to close on the deal. This is when you sign all the paperwork and pay for the home.
Your real estate agent will help you with this step to ensure that everything goes smoothly. Ensure you bring the proper documents, such as identification and proof of insurance.
You might have to pay some fees, such as the loan origination fee, appraisal fee, and title insurance. After you’ve closed on the deal, the home is officially yours.
Avoid Costly Mistakes by Following This Checklist for Buying a Home
Buying a home is a huge decision, but it doesn’t have to be overwhelming. Follow our checklist for buying a home, and you’ll be one step closer to owning the home of your dreams. Remember to work with a reputable real estate agent to make the process easier.
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