Buying a home can be a daunting task, but it doesn't have to be. Know what you can afford before you start looking for your dream home. This will keep you from getting in over your head and help you make good decisions along the way.
Don't find yourself without a home because you were overextended or unprepared. The key to avoiding these scenarios is being informed, so here are six steps to help you make the right decision for you and your family.
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Step 1: Find the Right Agent
Find the right agent to help you find your dream home. A real estate agent can walk you through the process and assist with negotiations on a new home. They'll also be able to advise you on areas of town that fit your lifestyle and budget. Plus, they'll be familiar with the local market and neighborhoods, which means they'll be able to help you find the best home for your money.
It could help to list all the things you're looking for in your dream home and prioritize those items. This is because it's essential to be realistic as homes often don't meet your expectations, but some things need to be met, such as schools, location, safety, amount of bedrooms, and bathrooms. Being flexible is just as important as being realistic.
Step 2: Get Pre-Approved for a Mortgage
Before you start looking for a home, it's essential to know how much of a mortgage you'll be able to get approved for. Keep in mind that lenders typically only approve a maximum of 28-35% of a home's purchase price. However, finding a home that fits into that price range can be challenging.
So, if you're considering a home that costs more than what is typically approved by lenders, be sure to speak with a mortgage specialist. They'll be able to assist you with finding other options, such as different lenders that might approve your purchase price or find a way to get you the down payment and additional funds needed for closing.
Step 3: Get Your Finances in Order
As mentioned, it's crucial to get pre-approved for a mortgage before you start looking to purchase your dream home. This is because being approved ahead of time will allow you to shop around for the best deal and negotiate with the seller, among other benefits.
That's why if you haven't begun saving up for your down payment yet, then it's essential to start now. The average down payment is currently 8-10% of the purchase price. However, you also need to factor in other miscellaneous fees, such as closing costs and agent's commissions.
Step 4: Look for the Perfect Home
Once your finances are in order, it's time to start looking for your dream home! You could either use a home buying app to look for houses on the market or go to real estate websites to do research. Another option is to drive around your chosen neighborhood to look for homes for sale manually.
When looking at homes, remember to understand the differences between asking price and selling price. For example, if you see a house priced at $200,000, that is typically the asking price. Keep in mind that most sellers will start high and negotiate their way down.
After you've found the house of your dreams, it's time to start looking at the property itself. Notice things like how many bedrooms and bathrooms there are, along with the number of levels. Also, be sure to check the foundation and roof, because if either is in poor condition, it could be a significant issue.
Step 5: Make an Offer and Negotiate
When you've decided that a home is the right fit, it's time to make an offer. This is where your real estate agent will come in handy, as they'll be able to provide you with a home appraisal and determine the proper offer amount. It could help to submit a high offer and negotiate down in some cases.
This is because most sellers will not accept the first offer that comes their way, but they might consider the second. So, if you're interested in a particular property and the price is too high, try submitting an offer and asking to negotiate.
Also, make sure to conduct inspections on the home. This is to determine if there are any major structural problems, like cracks in the foundation or mold, which could end up costing you more down the road.
Step 6: Close on the House and Move-In!
Once you've agreed on the price, it's time to get the final paperwork together. This includes the mortgage pre-approval, earnest money deposit, home inspection reports, among other documents.
After all the paperwork has been signed, it's time to celebrate! It might take a week or two for you to get the keys and officially close on your new home. The process of becoming a homeowner may seem frightening at first, but it's nothing that enough preparation and guidance can't fix. So, follow these six steps to buying a home, and you're sure to find the right fit for your family.
This is a contributed post.
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