Whether you’re a first-time homebuyer or it’s not your first rodeo, if you’re looking to buy a home, you should set a plan in place. You should expect things to come up that will change your plan, but a step-by-step process will help you cover your bases and keep things moving along. Let’s talk about how to prepare for a home purchase.
Determining How You will Make the Purchase
It’s important to know what you can afford, stick to your budget, and understand how you will pay for the house. If you can pay cash for the house, great! However, if you’re like most people and you need a mortgage, then you should get prequalified and have a loan set up prior to starting your house hunt. Here are some types of loans to consider:
- FHA Loans — An FHA loan is a wonderful option for first-time buyers who have less money for a down payment and who lack a significant credit history. You can explore this type of loan by looking at options such as PennyMac loan services, which can walk you through the process from start to finish.
- Fixed-Rate Mortgage — This may be the loan option for you if you want a predictable interest rate and monthly payment.
- Adjustable-Rate Mortgage — If you have a low credit score and/or won’t be living in the house for too long, then this loan may suit you.
- VA Loan — VA loans help servicemen and women reach their homeowner goals by providing loans that require no down payment, have looser requirements for credit scores, and more flexibility if you experience financial setbacks.
- USDA Loan — Eligible rural and suburban homebuyers may qualify for a USDA loan that requires no down payment, low interest rates, and all-around better terms.
Finding a Good Agent
There’s no reason to navigate the home search and purchase on your own. A buyer’s real estate agent can help you find the best home that’s right for you and your family and help you negotiate the best deal. Having someone in your corner to point out the perks and pits of a particular house is invaluable. Here’s what you should look for in an agent:
- Someone who has experience, not just in the field but in your geographic area as well.
- Someone who comes highly recommended by people you trust.
- Someone who takes an average commission for your area.
- Someone you interact with well and have a free exchange of ideas with.
Finding the Right House and Making an Offer
Once you determine your price range and select an agent, then it’s time to start the house hunt. Don’t rely on pictures alone; take the time to see the house, take notes when you visit, and check out all the little details. Don’t rush the home buying process. When you do find the right house, have your agent make an offer, negotiate the best price, and walk you through the contract paragraph by paragraph so that you know what you are getting into.
Inspections, Appraisals, Loan Paperwork, and Closings, Oh My!
Once you sign the real estate contract, the clock starts ticking until closing and the ball really gets rolling. With the help of your agent, you will set up an inspection to give you a report on the condition of the house. Pending the inspector’s findings, you will either proceed with the purchase, withdraw, or go back to the negotiating table. Then, you will work with your lender to get them all your financials, get an appraisal, and prepare for closing. At closing, you will then deliver proceeds, sign your lender’s paperwork, and get a title to the house.
A well-laid plan put into place prior to beginning the home buying process will help you stay on track, keep your expectations realistic and get you to the finish line. Start by figuring out how you will pay for the home and getting pre-qualified for whatever loan works best for you. Develop your team with a good agent and let them walk you through the home search and purchase. In no time, you will be settling into your humble abode.
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