Are you tired of putting your hard earned money toward rent? If so, it’s a great time to seriously consider buying a home as interest rates are at a historic low. Here are 7 steps to guide you through the home buying process:
#1 Save for your downpayment and closing costs
Some loans offer 0% money down like USDA and VA loans. FHA loans require 3.5% down, and conventional loans require as little as 3%. With the conventional loan, if you put 20% down you avoid paying PMI (Private Mortgage Insurance) and can qualify for a lower interest rate. There are other ways to avoid paying PMI with less than 20% down, but the interest rate is higher. I suggest you contact a local mortgage lender for more details.
#2 Research your credit score and work to build your credit
You can access your credit score and credit report online through any of the three credit bureaus: Equifax®, Experian®, and TransUnion®. From their websites, you’ll find information on how to dispute or correct any misinformation on your credit report. Talking to a local mortgage lender or financial advisor about your credit is beneficial as they can provide resources to guide you.
#3 Contact mortgage lender to get pre-approved
Having a preapproval letter to submit with your future offer can often make that step go smoothly. After gathering information and documents from you such as social security number, verification of employment, a recent pay stub, and possibly other personal documents, the lender will tell you if and how much you qualify to borrow for your home purchase. You will want to decide then how much you are comfortable borrowing in relation to your monthly budget. Be sure to ask the lender about help with closing costs and down payment assistance programs. You may qualify for one or both.
#4 Find a REALTOR®
A REALTOR® is your expert guide through this home buying process and will guide, advise, and negotiate for you. Typically when houses are listed through a real estate brokerage in South Central Ohio, the seller pays both the Buyer’s Agent and their own agent. If you decide to purchase a FSBO (For Sale By Owner), the Seller may or may not be willing to pay your REALTOR’S ® fees. If you are going to write a contract on a FSBO, you’ll want to discuss commission fees with your REALTOR® prior to submitting the offer.
#5 Find a house and make an offer
Once you’ve found the home that is in your budget and meets your needs, your REALTOR® will draft and submit the offer. Your offer may be accepted as written, the seller may submit a counter offer back to you, or your offer may be rejected. Your REALTOR® will work closely with you through this phase.
#6 Have a home inspection and appraisal completed
At this point, the REALTORS® will order inspections such as termite, whole home inspection, gas line, and septic inspections as specified in the contract. Your lender will order the appraisal to ensure the property is worth the price you offered to pay in the contract. During this phase, the lender will ask you for additional personal documents such as pay stubs, bank statements, and copies of tax returns. It’s crucial to get these documents to the lender as quickly as possible to stay on track for a timely closing.
#7 Close the transaction and move in!
Once the lender has fully processed the loan, inspections are complete, applicable repairs have been made, and the title agency has finalized the paperwork, then a closing date is set. When you sign all required documents at the closing table and provide your down payment and closing costs payments, then you’re a homeowner! CONGRATULATIONS!
If you are thinking of buying a home, I’m happy to answer questions you may have and assist with your real estate needs. Contact me today!