After years of rentals, cramped space, and poor or tardy maintenance by landlords, you are finally in a position to purchase your home. Finding your first home is exciting but also somewhat intimidating. There is a lot of paperwork you need to get out the way before you even start looking. Here are the ins and outs to make the process less daunting.
Preparation and Paperwork
Before you even start looking for a home, there are a few important steps that need to be followed. The first of these is to get your credit report. If there are any errors, you should have them corrected as the higher your score, the easier it is to get good financing. Next, work out your budget. Owning a home involves more than just paying the mortgage and services. Here is a breakdown of the costs you need to take into consideration.
Make sure you have the down payment. While this could be the often-cited twenty percent, most homeowners paid less than half of that. You will need to speak to a licensed mortgage loan originator who will help you with the most appropriate loan product. You will have to decide on a 15 or30-year repayment period. A shorter-term loan is a higher repayment amount monthly while a longer-term loan has a higher interest.
The next step is to compare loans from different companies. Once you have selected one, they will give you a pre-approval letter. This does not mean the loan is approved but it allows you to work with that amount and speak to a real estate agent. Look for a lender who can give you a conditional approval.Now you can start looking for your home.
Looking for a Home
Choose an area where you would like to live. Factors you may want to consider are schools nearby, gyms within reach, access to shopping centers, and the crime rate. Your real estate agent should be knowledgeable about the area. You might overlook your dream home if you only look at superficial aspects. Remember that you can repaint and furnish the home as you please. Focus on the size and flow of rooms, quality of the roofing, storage space, and plumbing. Consider how long you are likely to live there and if it will still match your needs as your family grows.
If a house has been remodeled, ask to see the permit. If it is not in order, you will sit with the costs of getting it into a state of compliance. Schedule a home inspection (you will have to pay for it) to look for termites, mold, and structural problems. See if the buyer is willing to sign a one-year warranty against defects.
The Final Steps
Get a home appraisal. If this is lower than the calculations made to set your loan amount, you can renegotiate the price.Choose a home insurance company that offers umbrella coverage for your home and your vehicle. This will be needed before the sale is completed and will protect you against damage to the property.
Make sure you change your address with the bank, utility services, and any accounts. Once the final papers are signed and payments released, the home is yours.
Now that all the hard work is over, you can begin the adventure of moving in and transforming your new house into a home you can be proud of.