So, you’re ready to buy a house but you’ve got no idea how to do it. It may be tempting to let your emotions run wild, so much so that you find yourself looking at homes WAY out of your price range. The truth is that buying a house is a lengthy process, and your first home may not be your dream house. Instead of searching the internet for real estate hacks for impossibly cheap down payments, get real with yourself, and prepare for the journey ahead – the right way. Here are the 4 steps to follow when buying a house.
2. Get Your Money Together
It’s obviously much more fun to just get house hunting, but this is just a huge waste of time if you haven’t addressed the reality of your financial situation. The first thing you need to do is determine how much money you plan on setting aside for the down payment. Determining how much money to save requires preparation and planning, like any other financial goal. Most first-time buyers aim to put down at least 10%, and ideally, 20% as this way, you bypass private mortgage insurance, which only adds cost to your mortgage payments.
You also want to consider your finances as they pertain to closing costs. Closing costs refer to the fees that stakeholders in your transaction charge. A rule of thumb is to save about 3% of your home’s purchase for closing costs as well as any prepaids involved. Prepaids cover the costs that are attached to insurance items and prorated property taxes.
2. Determine the Best Mortgage Option
Avoid liabilities and consider the frameworks that most borrowers select to meet their financial responsibilities as new homeowners:● Fixed-rate: These are conventional loans that maintain your interest rate as-is for the lifetime of the loan. Most buyers choose this method of attack because it firmly protects you from increases in rates. ● 15-year: Your payments will be higher, but you’ll also pay off your mortgage in half as much time as a 30-year term, saving you tons in interest. ● Monthly payment up to 25% of take-home pay: This is a flexible option as it gives you more money to save and set aside for retirement or college funds. ● VA Eligibility- If you’re an eligible veteran, the VA is willing to pay your lender 25% of the VA loan you’ve acquired, should you default. Additional borrowing options are also available without any need for down payment. Check out CalVet loans and see if you qualify.
3. Get Mortgage Preapproval
Since most of us can’t afford to buy a home out-of-pocket, lenders are available to assist with a prequalification process that prepares you to buy your home. Basically, you sit down with your lender who guides you through a conversation about your finances, assets, and general income. Your financial data will then be verified and submitted for preliminary consideration in writing. Receiving a preapproval letter shows that you are a serious buyer and shows mortgage lenders that you’re ready to take the next step.
4. Get a Real Estate Agent
It’s easy to search for homes for sale online, but even with this luxury, you shouldn’t forego the advice of an expert. Securing your home is a big deal, so you want someone on your side that can help you make the right decisions. Real estate agents also advocate for their buyers. Plus, most of the time, the seller actually pays for your real estate agent fees, so it’s a free benefit for you! An experienced agent can also introduce you to off market property brisbane (or elsewhere) that aren’t publicly advertised, giving you access to a wider range of suitable homes.
Step 5: Decide on House Features
Once all of your finances are in order, you get to do the fun work of determining what features in a house you’re looking for. Make a list of all your must-haves. This is a good time to consider things like gardening capacity, closet space, flooring, neighborhood framework, interior design, etc. Share these essentials with your real estate agent, and feel free to browse online filtering to match your terms.
Finding a place to call home takes a lot of planning and financial consideration. Take care of the financial aspects first so that you can see which homes are truly within your reach.
