Buying a house can be one of the most exciting and stressful times. You can’t wait to find your dream home, but when it comes down to crunching numbers, looking at homes, and making decisions, it can feel like one of the hardest decisions of your life.
Here’s how to make the process easier on you and your family so you can enjoy buying a home.
1) Find the Right Real Estate Agent
Buyers don’t pay the real estate agent’s a commission – that’s the seller’s job. So essentially, it’s free for buyers to use a real estate agent, so why not get the support?
The right agent will get to know you and your financial situation. The agent will discuss your options, understand your needs and wants, and know which areas to look in that fit your requirements.
Not only does a real estate agent show you homes, but they also handle negotiations, walk you through the paperwork, and handle any issues that come up throughout the escrow process.
Real estate agents must operate in your best interest rather than making a higher profit, so you won’t pay more for a house or get pressured into buying something you can’t afford.
If anything, you’ll have a larger pool of homes to consider and have earlier access to seeing them than if you did it yourself.
2) Get Pre-Approved Before Looking at Homes
It can be exciting to look at homes but don’t put the horse before the cart. If you don’t know how much you can afford or how much a lender will lend, don’t waste your time looking at homes you can’t afford.
Today, most sellers won’t let buyers view their homes or won’t accept an offer from a buyer that isn’t pre-approved.
It takes only a few days to get formal pre-approval from a lender. To get pre-approved, you’ll talk to a loan officer, complete a loan application and provide documents, including:
- A month’s worth of paystubs
- Two years of W-2s or tax returns
- Two months of bank statements
- Proof of your employment
Underwriters will evaluate your documents and determine which loan program’s requirements you meet and how much you can afford.
With a pre-approval letter, you know how much you can afford and can bid on homes when ready.
3) Create your List of ‘Needs’
Getting caught up in the excitement of looking at new homes is easy. But, before you do, create a list of needs and wants.
Needs are the things you must have in a home or factors the home must meet. A few ideas include:
- Do you need close proximity to the highway system?
- Do you need a specific number of bedrooms?
- Is a first floor bedroom a requirement?
- Do you prefer a specific floor plan?
Next, create your list of ‘wants’ or things you could be without but would love to have. Then, when looking at homes, you’ll make sure they check off the boxes of your needs, and if they have any of your wants, consider it a bonus.
4) Know the Market Values
During the pandemic, millions of homebuyers paid more than a home was worth. Home values are coming down today, and home buyers aren’t as desperate as last year.
Before you bid on a home, find out its market value. Your real estate agent should be able to help you get this information. If not, you can chat with a local appraiser or ask your loan officer to help you determine the area’s market value.
The key is not to pay more than the home’s worth because that makes getting financing more difficult and could put you in over your head as a new homeowner.
5) Know that the Timeline is out of your Control
There are many people that make up a real estate transaction. Many vendors have to come together, as do buyers and sellers. The sales contract will have a potential closing date, but that could change based on different circumstances.
Throughout the process, know that your real estate agent and mortgage lender have the process under control. If the appraisal is delayed or title work takes longer than expected, it could delay the process slightly, but it doesn’t mean you won’t close.
Go into the transaction knowing you aren’t in control, but many professionals have your back in handling the process.
6) Have a Buffer in your Savings
If you’re considering buying a house, you probably already have a down payment saved, but don’t forget about closing costs.
They can be 3% – 5% of your loan amount and often throw potential buyers off when they realize they don’t have enough.
Save more than you plan to put down on the house, so you have enough for closing costs. If you don’t have enough, talk to your loan officer about lowering your down payment to allocate for the closing costs. Most loan programs today have low down payment requirements, so you might be able to lower your down payment, take a slightly higher mortgage payment and get the loan you need.
7) Be an Educated Buyer
The easiest way to take the stress out of buying a home is to be an educated buyer. Learn as much as possible about the mortgage process, how the transaction works, and what sellers want from buyers.
The more terminology you know and the more you understand the process, the less anxiety-provoking buying a house will be.
Don’t let the stress of buying a house take away from the fun. It can be a great time when you find the home of your dreams and that you can afford.
With the support of the right professionals, the process will be a walk in the park and end with you receiving the keys to your dream home.
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