6 Steps to Buying a Home

Whether it’s your first time purchasing a home, or you’ve decided to sell your current property, it’s important to know as much as you can about the home buying process. While your real estate agent will provide you with the best advice, you can stay ahead of the game by understanding the basics with these six steps.

Know Your Credit Score

Your credit score is likely the single most important factor in the home buying process. This score will determine both the variety of homes available to you as well as, importantly, the interest rate you will secure on a home mortgage loan. There are a number of ways to monitor your credit score, but one of the best is to visit annualcreditreport.com. This site is a free way to monitor and access your credit score from all three of the major credit reporting agencies (Equifax, Experian, and TransUnion). You are entitled to one free credit report each year. You can also be preventative with you credit score. Pay all bills on time, keep low balances on revolving credit accounts (credit cards), and do not let any accounts fall into default or be charged off, as these will seriously reduce your score. A strong credit score is anywhere between 720 and 850.

The Importance of Saving Money

Most first purchase mortgage lenders will require some form of down payment on a new mortgage loan for a home. In addition, some cash will be needed once you purchase the home for improvements, unexpected maintenance, furniture, taxes, insurance, and closing costs. Therefore, having a small nest egg is crucial in the home buying process. Start early, and work out a saving plan with your current income so that each pay period you can add a bit more to the house fund.

Find The Right Real Estate Agent

One of the best ways to find a great real estate agent is through referrals. There are likely hundreds of agents and agencies in your larger metropolitan region, but sifting through all of these is time consuming and overwhelming. Instead, reach out to your network of homeowners and ask for referrals for agents. Make a short list of agents, and set up meetings so that you can assess each. It’s a good idea to have many questions prepared, as well as a list of priorities (house size, income, purchase price range, neighborhood, schools, etc.) with you when speaking with potential agents.

Get PreApproved For A Home Mortgage Loan

Getting preapproved for a mortgage is important before completing an offer on a potential home. Most real estate agencies will not proceed with an offer agreement before the preapproval is secured. This means meeting with potential lenders about mortgage loans. Remember that often a preapproval is not a guarantee for a mortgage, nor is it a binding agreement to work with a potential lender. However, the preapproval will require an investigation into your income, debts, tax returns, and bank statements. Most lenders will not give a preapproval without having first established that you are well-capable of repaying a large debt like a mortgage loan. You will need to complete the approval process once you choose the right lender for your loan.

Placing The Right Offer

Making the right offer on a potential home is more of an art than a science. While some believe that the strongest, highest offer will always win, this is not always the case. Build a rapport with your and the home’s real estate agent, as well as with any attorneys attached, so that your character, personality, priorities, and interests are also taken into account as well as your financial offer. It’s best not to low-ball enormously on an offer as this may risk offending the home sellers, however, you usually want to get into a negotiation that ultimately will leave you paying less than the asking price. Your real estate agent can be very helpful here, too, as they will likely be an expert in reading the needs of the home sellers and the other real estate agents involved.

What Happens After Offer Is Accepted

Once an offer is accepted, generally the home goes into what is called escrow. This means that the property is handled by a third party under the agreement to deliver the property professionally and timely upon completion of the necessary tasks. You will likely need to schedule an appraisal for the home value as well as an inspection for the building and its contents. It is important to get a licensed and reliable inspector, as you do not want to purchase a home only to find out later that there are problems with the foundation, the roof, or other critical components of the property. Once inspection, appraisal, and mortgage approval are finalized, it is up to you and the home sellers to decide on a closing date to transfer the deed.

Your real estate agent is the best source of information about the local community and real estate topics. Give the Rigley Realty Group a call today at 916-396-7487 / 916-397-4787 to learn more about local areas, discuss selling a house, or tour available homes for sale.