Buying a Home, Step by Step
10 tips to guide you through the home-buying process
The centerpiece of the American Dream is a home you can call your own. And right now your shot at a home is as good as it’s been in nearly a decade. The post boom bust market offers slashed prices, record low interest rates, seller concessions and even discounts from real estate agents. The market is yours for the taking, however, if this is your first time buying a home the purchase can quickly overwhelm you with details large and small.
To keep you focused, here are 10 step-by-step tips.
- Cure your credit. Go to AnnualCreditReport.com, the only federal government-sanctioned service for obtaining a truly free credit report from one or all three of the major credit bureaus. Check your reports for errors, omissions and other marks that need attention — before the lender gets a look.
Pay the nominal fee to also get your credit score. The best mortgage rates require a credit score of more than 700. Learn how to boost your score before you apply for a mortgage. A low credit score can also prevent you from obtaining a mortgage.
- Check your budget. Without a budget you have no idea where your money goes, where you can cut costs and ultimately, how much money you have to spend on a mortgage payment. Budget how much house you can afford and what you really need. You may not need that $300,000 loan the bank offers.
- Get the money in the pipeline. Find your dream home and then discover you can’t qualify for it will be a sinking feeling you’ll never forget. Shop around, then get pre-approved for a mortgage so you’ll shop within your means. The seller will see you as a serious buyer and you’ll level the playing field with other bidders.
- Get married to the home you need. Like planning a wedding, you must decide what you can and cannot live without. The cans are wants. The cannots are needs. Be prepared to compromise, substitute and rethink what you really need.
- Get you ducats in a row. A 20 percent down payment will land you the best interest rate and the best terms. Ten percent down is better than 5 percent and so on. The more money down, the lower your monthly payment and the greater stake you’ll have in the home.
Get good help
- Employ the best Realtor. Ask family members, friends, co-workers, professionals and others you trust, who’ve also recently enjoyed a successful buying experience, for referrals to Realtors. He or she is your point person for the transaction. You will be working one-on-one with him or her for awhile, so it is important that you feel comfortable working together. Interview prospective Realtors just as you’ve been interviewed for jobs you’ve worked.
- Deploy good legal counsel. Likewise, when necessary, find a trusted real estate attorney who is comfortable to work with. Seek an attorney with a fixed escrow closing fee so you can budget the cost with other home buying expenses.
Begin the hunt
- Visit and compare numerous properties. Use the Internet and your Realtor’s directions to get started, but you also need to touch-and-feel visit a variety of homes to learn just what your money can buy. Due diligence will leave you confident you’ve left no stone unturned.
- Don’t get emotional. Don’t fall in love with the first home you see. Beware of bidding wars. They are emotional hot beds. If your emotions drive up the price, you won’t be able to put a price on those emotions when it’s time to sell. Detach yourself. Take ample time to comparison shop.
- Ask many questions. Direct many questions at your real estate agent, your lender and your attorney. You pay them for answers. The only dumb question is the one you didn’t ask.