Owning your own home is one of the most satisfying things you can do. The process is exciting and can be stressful so be prepared to go beyond your comfort zone. It will all be worth the effort in the end. You might have a vision in your mind about what type of home you want. Life is not perfect so you might not get what you want the first time around. A bit of hard work, sacrifice and smart planning and you could be the owner of a great home that is welcoming and something that you are proud of.
It is too easy to get starry-eyed about the type of property you want. Too often people want a brand new house, with brand new furniture in a chic area and soon get deflated when they realize that might not happen. That is not to say that a new house is out of bounds but there is a lot of fun to be had creating a vision for an older property then needs a lot of effort to decorate and furnish.
Whatever your budget and vision there are seven stages to buying your home and here is a quick guide that will take you through the process you can expect to take.
Save and Plan
Ideally you will need to put provide a down payment of 20% but you can go as low as 3%, although there will be additional charges in mortgage insurance policies depending on which route you decide to take. There is also the closing costs which are for the processing of the loan and usually range between 3% and 6% of the purchase price and the Earnest Money, which is usually between 1% and 2% of the purchase price. The Earnest Money will need to be held by the Real Estate Agent when you make an offer on a property and is only handed to the seller when the offer is accepted. A Mortgage Expert will be able to provide details about the options that are available to you.
It has been widely reported that home ownership is out of reach for most young people, but for those young people who may be reading this, ask yourself why is it that some young people are managing to buy their own homes. Those young first time buyer cannot all be relying on the bank of Mom and Dad surely? Not all will have purchased their homes with financial support. There are young people who are making it happen for them through prudent saving, sensible decision making, willing to be creative and make sacrifices. It does not take as long as you would expect.
Everyone can make adjustments to their spending in order to increase the savings needed not just for the down payment but also closing costs and you may well be buying your first home, in which case furnishing and electrical goods will need to be purchased. Take a look at your expenditure against your income and no doubt you will come up with a figure that you could save each month but wonder why your savings are not at that level. There will be areas where you can cut back on your expenditure to build up your down payment.
You have got to the stage where you are ready to seriously think about buying a home. It is time to have a discussion with a Mortgage Expert and get your mortgage loan approved before you start looking at properties. A loan agreed in principle will have you take seriously by Real Estate Agents and give sellers confidence that they are not wasting their time on dreamers. A loan approval also ensures that you are realistic about the properties that you view and gives you the confidence to negotiate with sellers. Also it save disappointment if you have your heart set on a property and the seller makes an agreement with another buyer who can move quicker because they already have a loan approved. Buying a house can sometimes be complex. Getting all the issues out of the way, before you start looking at properties, means that you can move quickly.
Real Estate Agent
Find a reputable Real Estate Agent that you can develop a relationship with. A Mortgage Expert might be able to recommend a company or go with recommendations from people who have purchased homes relatively recently. Build a relationship with the Real Estate Agent, as that may prove useful finding homes that are new to the market and may sell quickly. They may well give you the heads up before a property gets to the market giving you the chance to be one of the first viewers.
Before you start making appointments to view properties think about which area you would like to live, how long will the commute to work be, what are the local amenities, is public transport frequent, location of local schools, public parks, leisure activities etc.
When you go house hunting do be respectful and polite to the current home owners. Ask a lot of questions and try to establish details about features that may need work such as plumbing, electrical work and be observant. Look for signs of structural damage such as water marks on ceilings and walls, slanted floors, cracks on walls that look larger than would normally be acceptable. Ask questions about chimneys, appliances and furnaces, probe about age, maintenance history etc.
Your Real Estate Agent will produce your offer letter and ensure that consideration has been given to the age and size of the property, the level of repairs required, condition of plumbing and electrics, heating system, air conditioning, foundations and the roof. At this stage you may have to compete against other home seekers. Your Real Estate Agent will provide advice about the level of competition. Be mindful about not getting too embroiled in getting the home at the risk of pushing yourself financially in the long term.
Once an offer has been accepted arrange for an independent home inspection to be conducted by a qualified professional. The home inspection will identify areas where work will be required e.g. structural, electrical etc. It provides the buyer with details that can help with the negotiation process and might be useful in persuading sellers to carry out the work before the closing.
You are the final hurdle of buying your home and it time to review the Closing Disclosure. Ensure the details are accurate and you fully satisfied with the arrangements. This is not like buying something on the internet, there will be no cooling off period once you have those keys on your hands.
The closing process will take place with all parties present. The closing agent will lead this process ensuring that they mediate between the seller and buyer to ensure a swift transfer of ownership. The closure will require you to sign the legal documents and pay the closing costs.
An expert Mortgage Advisor can provide details relevant to your personal circumstances that will help you make decisions about your home purchase.