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10 Step Guide to Buying a Home

Every investment will take a bit of effort and time to go through, particularly when it comes to buying a home for the first time. That’s why this 10 step guide will ensure that your home buying process goes as flawlessly as possible. You will want to make the best decision, whether it is your forever home or an investment, it can be one of the largest financial decisions of your life.

In This Article
1. Start Researching Early
2. Set a Budget
3. Get Preapproved for a Mortgage
4. Find a Good Real Estate Agent
5. Find a Home and Make an Offer
6. Get a Home Inspection
7. Set Your Loan Features
8. Get a Home Appraisal
9. Handle the Paperwork
10. Close the Sale

1. Start Researching Early

When you are planning to buy a home, you do not want to leave the research up to the last minute. Instead, you should begin as early as possible. Check all the buying house websites and note down all the homes that you have a particular interest in.
You should also make some inquiries on how long they are likely to remain on the market. Be certain that you also note any potential asking price changes, as it will give you a couple of ideas for the housing trends. If you try how to buy a house Reddit, you might also come across some useful suggestions.

2. Set a Budget

Before you buy a house, you also need to determine exactly how much you can afford for it. On average, a home costs about $192,000 to buy, but this will also depend on your average monthly or yearly budget – as Louie Ortiz, CEO of LouieOrtiz.com states:
“Your house should not cost any more than 3 to 5 times your annual income per household. Bear in mind that aside from the down payment, you will also have your other debt. You will also have to eat. This means that you should not go over your budget, as you will be spiraling down in even more debt. That kind of debt generally leads to mortgage defaults, and you may lose the house.”
The less you pay, the smaller the strain will be on your budget. Sometimes, it’s better to sacrifice the (initial) house of your dreams for a lower mortgage, as the house may be modified later.

3. Get Preapproved for a Mortgage
People wondering how to buy a house with no money have generally reached one conclusion: they need a loan. But wouldn’t it be embarrassing to look for the perfect house, find it after a long search, and then realize that the loan amount you have applied for has not been approved?
This is why you should initially get pre-qualified for the mortgage – to make sure that you are looking within your price way. By getting pre-qualified, you will already know what is too expensive for you and what isn’t.

4. Find a Good Real Estate Agent

Real estate agents are a key part when you are planning to buy a home. They can give you all the right information on the house or the neighborhood that would normally not be public-accessible. With the right real estate agent working by your side, not only should you be able to buy the perfect house, but you might be able to get a good price for it as well.

5. Find a Home and Make an Offer

Before settling on a home, you need to tour as many houses as possible. You will likely see several properties, which is why you might want to take a lot of notes and pictures. This is how buying websites can also help, as they might provide the basics.
Take the time that you need to find the perfect home, and then work with your real estate agent so that you can get a fair offer. Once the offer has been made and the seller agreed on the price, the home will move into escrow (i.e. the period necessary to complete all the other remaining steps).

6. Get a Home Inspection

Home inspections are a mandatory part of every home purchase, as they will tell you whether there are any irregularities with your home or not. Some sellers might ask for a higher price – but upon the home inspection, you might be entitled to go even lower.
In order for the home inspection to be fruitful, you need to find someone that is qualified for it.
Jordan Lulich, former Forbes contributor has a few tips in regard to that. His comments were based on a Realtors® Conference Index survey, where it showed that 78% of the contracts that didn’t close were a result of a home inspection. While the delay might seem troublesome at first, it will still benefit the buyers in the long run. You just need to go for the right person.
“The survey showed that over 75% of the real estate contracts contained contingencies based on home inspections. Thus, as such a pivotal step in the purchase of a home, it’s important to check the training, education, and qualification of the home inspector that will be used. For example, in Florida, an individual must comply and complete certain requirements that are regulated by the Florida Department of Business and Professional Regulation. Each state has its own requirements, it’s therefore important to ensure you hire a state-certified home inspector.”
Also, you should only look for home inspectors that offer just the inspection – and not repairs as well. The latter tend to be contractors, and since their purpose is to repair the wrongs in the house, the price might jump. Inspectors, on the other hand, will only provide the mandatory and brush over the optional.

7. Set Your Loan Features

You may have already been pre-approved for the loan – but that does not mean the technicalities are over. Work with your mortgage lender and see which option fits best. Set a monthly payment that you find appropriate, decide on the period, and see what your interest rate will turn out as. When deciding on the loan, you should also consider whether you are planning to stay or move in the future.

8. Get a Home Appraisal

Appraisals are one more thing that you should not skip, as they will offer you an estimate of the house’s value. The one doing the appraising is a third-party member, and they will not be associated in any way with the buyer or the lender. In an article for Investopedia, Amy Fontinelle also discusses the value of appraisals.
“When you’re buying a home and are under contract, the appraisal will be one of the first steps in the closing process. If the appraisal comes in at or above the contract price, the transaction proceeds as planned. If the appraisal comes in below the contract price, however, it can delay or derail the transaction. Chances are, neither you nor the seller wants the transaction to fall through. As the buyer, you have an advantage, in that a low appraisal can serve as a negotiating tool to convince the seller to lower the price. The bank won’t lend you or any other prospective buyer more than the home is worth.”
In the end, in order to close a contract, you must have your appraisal close by.

9. Handle the Paperwork

On our buying a house checklist we also have the paperwork aspect. To make the process smoother, Louie Ortiz also has a bit of advice for you: “If you wish to call that home ‘yours,’ then you need to bring the title in your name as soon as possible. In most cases, the lender will give you the resources necessary to change the titles – but if you want everything to go flawlessly, you need to be certain that the seller is the home’s rightful owner.

10. Close the Sale

With everything said and done, all you have to do now is close the sale. After you have established that everything is in order with the paperwork, you just need to sign the documents, and you are done. In a few days, you will be able to move into a new home.

Final Thoughts

With a bit of research, anyone can find the home of their dreams. You just need to be very thorough in your search. Hopefully, our steps to buying a house for the first time have proven useful.

 

 

 

Sources:

  1. https://www.forbes.com/sites/jordanlulich/2018/06/18/what-is-a-home-inspection-and-how-do-i-hire-an-inspector/#32c75e321934 
  2. https://www.investopedia.com/articles/pf/12/home-appraisals.asp