If you’re like many Americans, then you know the value of owning your own home. It’s a great place to raise a family, it offers more privacy than an apartment, and it also ensures that you have equity.
However, buying a home is not always easy. In fact, there are several steps involved in this process. Let’s take a moment to discuss each.
Step 1: Evaluate your readiness
The first step you should take in the home buying process is determining how prepared you are to take on the responsibility. Have you taken the time to consider your income? Do you have enough money in savings? Are your fixed expenses easy to handle? Before you take the official plunge, these are the things you should discuss with your family.
Step 2: Work on your credit score
If you want to ensure that you get the house of your dreams, then you must consider your finances. Specifically, you need to make sure that you’re able to meet the strict requirements of the lenders. Many require that your credit is in excellent condition before buying a home.
So before you actively start searching, pay off all of your debts. Do you happen to have outstanding balances on your credit cards? Are you still paying off your car loans? If you take care of these obligations, your credit score will improve significantly. Aim for a score of 700 or higher. This ensures that you get great rates.
Step 3: Secure pre-approval
Now that your credit score is optimal, you need to secure a pre-approval letter. Speak to a local mortgage broker about your desire to purchase a home. They have the ability to reviewed your finances and credit report and decide whether or not you qualify for a loan. These documents will also affect the amount of the loan as well as which mortgage solutions and programs you are eligible for. This information will be included in your pre-approval letter.
Step 4: Set a budget
When you receive your pre-approval letter, you may be tempted to search for a house that matches the amount that you have been alotted. However, it’s important to remember that you’re not obligated to spend the entire amount. In fact, before you start searching, it’s a good idea to take all of your personal expenses into consideration. Think about how much you can practically afford to spend on your home. How long will it take to pay the home off and are you comfortable with this time? Sure, the bank does take all of your fixed expenses into consideration before they give you an offer, but you should always set your own budget. How much are you willing to part with every month?
Step 5: Find an agent
One of the best things about working with a real estate agent is the number of resources they have at their disposal. Not only can they help to negotiate the best deal possible and make the closing process simple, but they also have access to countless listing services. And this means that they can offer extra insight into the housing market. Real estate agents can be especially valuable to individuals who have never purchased a home before or are simply short on time.
Step 6: Choose your property
It’s now time to visit the properties that stand out the most to you and then narrow down your list. In most cases, your real estate agent will assist you with arranging the viewings. Specifically, they will make sure to show you the properties that best match your specific personal preferences.
Step 7: Make an offer
Once you’ve chosen your dream home, it’s time to place an offer. This part of the process can be a bit tricky. There are several different factors that may affect your offer. For example, what is the current condition of the market? What time of year is it? Does the home need work? How long has this home been on the market? Also, is the home above or below your budget?
These are questions that you should keep in mind during this process. You may also use this time to negotiate the costs of closing costs as well as all of the necessary repairs.
Step 8: Inspection
At this point, your offer may have been accepted. However, if you want to ensure that you get the best deal, you need to do an official inspection of the home. This inspection will ensure that there are not bad surprises after you take ownership of the home. An inspection may also let you know if you need to further negotiate your offer. A professional will let you know if the home has structural issues, pest invasions, and more.
Step 9: Sign a sales contract
If everything has gone smoothly up to this point, it’s time to sign the purchase agreement, also referred to as the sales contract. This contract outlines all of the directions of your transaction. It also outlines the sale details such as repairs negotiated, fixtures that are being sold with the house, and specific disclosures. This contract and your payment will be held in escrow.
Step 10: Close
Closing can take several weeks. During escrow, you’ll work with DC mortgage lenders in order to secure your first mortgage. This process requires a lot of financial paperwork. And you’ll have to arrange a lender’s appraisal. During the closing, you may also be required to purchase homeowners insurance. Once your mortgage has been approved, you’ll be offered a final walk-through to ensure that all of the necessary repairs were made and you’ll sign the mortgage documents and be given the keys.
The Busch Team at First Savings Mortgage is here to help you through the process. Contact your local Washington DC mortgage broker today.