Purchasing a house can be a very gratifying experience, but it can be also be stressful if you don’t prepare properly. It’s a big decision, but the following steps will help you successfully navigate the home-buying process.
Step One: Evaluate Your Credit Rating
Good credit is essential to purchasing a house. It’s possible to purchase a house with poor credit, but it will cost you thousands because you will pay more interest over the life of the loan. A great credit score is 740 or more, but if it’s less than 700, you’ll need to work on raising it. You can do this by paying off delinquent debt, paying down credit card balances and paying your bills on time. You are entitled to a free credit report once a year, and you can also purchase your credit score for a small fee.
Step Two: Determine Your Budget
How much are you able and willing to spend on a house? Consider the total purchase price, as well as the monthly payment. Do you have a down payment of at least 10% of the expected purchase price? Don’t approach a lender until you’ve decided your minimum and maximum house budget. Knowing these numbers ahead of time can eliminate the stress of applying for a loan.
Step Three: Seek Preapproval
Gather the appropriate financial documents, which can include pay stubs, tax returns, and credit card statements for the past two or three years. Bring these to your bank or credit union and seek preapproval for a mortgage. Preapproval is a method of applying for a loan and getting approved before purchasing the house. This way you will know exactly how much you can spend while house-searching.
Step Four: Hire a Real Estate Agent
While it’s not necessary to hire a real estate agent, doing so can save you both time and money. Real estate agents can help you find the type of house you want in the location you prefer. They can also help you negotiate a fair price with the seller and help you understand the contract.
Step Five: Go House Shopping
With the help of your realtor or own your own, begin surveying houses in your price range. Once you’ve found the house you want, make the seller an offer. After you and the seller agree on the purchase price, the house will go into escrow to allow time to complete the home-buying process. An escrow account will be set up to hold the down payment and/or closing costs until the process is complete.
Step Six: Begin the Closing Process
During closing, you may review the results of the home inspection, make further negotiations if necessary and take one last tour of the house to ensure everything is in order. Finally, you will sign all the required paperwork and the title of the house will be transferred out of the seller’s name and into your name. Once the closing process is complete, you will be a proud new homeowner.
