Understanding how to find and finance the perfect home for you
A lot of time and effort is required when planning to buy a house. The following 10 steps can make your process of purchasing a house easier. They also enhance your decision making in the process.
Step 1: Conduct an Early Search
When the opportunity presents itself, you should begin searching websites, magazines and newspapers that contain real estate content. Further, you should take note of specific homes that you have shown interest in and monitor the duration they stay within the market. Also, you should notice any fluctuations in prices for it. This will awaken you to the trends in the real estate sector in specified locations.
Step 2: Consider the price of the house you can afford
In most cases, lenders would recommend people looking to buy property to purchase property that does not exceed their total earnings by a large margin (three to five times more). This is because if they planned to make a 20% down payment, it would be difficult to moderate the remaining debt.
However, it is vital to make this decision depending on your financial position. To determine this, you can use our affordability calculator to determine the type of house you can afford.
Moreover, the AutoSaves plan provided by the Discover Bank helps save your down payment, making it easy to track your savings each month for the grand project.
Step 3: Get Prequalified and Preapproved for credit for Your Mortgage
Before searching for a home, it is vital to determine the amount you can spend for that purpose. This is attained by getting prequalification for the mortgage. The requirements for prequalification are simple. You only need to provide your mortgaging bank with some financial information. This information is in the form of your total income and the number of investments and savings you have accumulated.
Consequently, the lender will assess your credibility and ability to pay and recommend to you the amount he can lend. This information is crucial as it provides you with a range of the house you can afford at the moment. Onwards, you can get preapproved for the credit. This entails submitting your financial documents to the lender for checking and verification of your financial status and creditworthiness. The papers submitted to the lender include bank statements, paycheck stubs and W-2 statements.
Step 4: Find the Right Real Estate Agent
Before buying a house, finding a reliable real estate agent is important as they provide information on neighborhoods and homes – information which isn’t readily available to the public. Real estate agents have impeccable skills when it comes to negotiation, knowledge of the buying process, and they are familiar with the areas you want to buy in, which can be very helpful. The most crucial part is that using an agent is cheaper since you do not incur any cost of hiring their services as they are paid from the commission the seller pays during the purchase of the house.
Step 5: Shop for Your Home and Make an Offer
After deciding that you want to acquire a home at a specified price range, you can now begin visiting homes lying within your price range. During this process, taking notes is important since that will give you a better chance to correctly choose from the many houses you will see. Also, it is important to take pictures and record videos of the houses you visit for easy decision making at the end of the day.
The following checklist can be used to assess each house you visit:
- Checking the plumbing by running the shower to determine the duration it takes to warm the water and the strength of the water pressure.
- Turning switches on and off to check the working of electricity.
- Checking the functionality of doors and windows by opening and closing them.
Assessing the neighborhood based on the following:
- Maintenance level of houses on the block
- The amount of traffic on the street
- The quantity of parking space for your family and visitors.
- Convenience of location – availability of hospitals, schools, shopping centers, public transport, parks, and restaurants.
It is essential to take your time while reviewing these aspects since they play a role in finding the right home. Working with your real estate agent is important as they will negotiate a comparable price based on the available homes in the neighborhood. On arriving at an agreed price, the house goes to escrow, one of the final steps of house buying.
Step 6: Do a Home Inspection
Ideally, an inspection of the property is a necessary procedure in property purchase to determine any breakages, damage and anything that needs fixing. Usually, the real estate agent helps your secure inspection services following the acceptance of your offer by the seller. The inspection is vital since it gives you another opportunity to renegotiate terms or to withdraw your offer should the inspection report disclose significant damages.
Moreover, the seller and buyer get a report detailing the findings of the home inspection which you will use to decide whether or not you want changes to made by the seller before agreeing to finish the purchase. In so doing, checking the house to determine whether repairs have been fixed is important.
Step 7: Work with a Mortgage Banker to Select Your Loan
Lenders are known for their many competitive pricing of loans and excellent customer services. For this reason, although you will have many questions while purchasing a home, you should seek the services of the most experienced and qualified mortgage bankers to offer assistance.
People have different priorities when purchasing a home. While others may be interested in keeping their monthly payments lower, others want to ensure their monthly payments do not increase. Better still, others take loans knowing they will be on the move soon.
Step 8: Have the Home Appraised
An appraiser is arranged by the lender to come and estimate the property’s value. Although the appraiser is involved, he is a third party and doesn’t have a close association with the lender. The appraisal ensures you are getting the property at a fair price.
Step 9: Coordinate the Paperwork
Purchasing a home involves a lot of paperwork. The lender organizes the titling company to handle the necessary paperwork to determine the correct property owner.
Step 10: Close the Sale
Paperwork is signed while closing sales. After signing the paperwork, it takes several days for the lender to fund your loan after paperwork. Having made the cheque ready and sent to the seller, you can move to your new home.