How To Buy A House In 2020
Buying a house is an exciting and emotional process for many homebuyers. Before you begin your search, it’s important to understand the home buying process; this can empower you to make an informed decision for you and your family.
How To Purchase A Home in 2020
It’s a new year, so help get your stared we’ve put together a 13 step guide to buying a home in 2020.
Understand why you want to buy a house
Buying a home is a big decision, so it’s essential to be clear about why you want to purchase a home, so you have no regrets. So how do you get started? First, you’ll want to define your personal and financial goals. Think about when you will be moving, the amenities you want in your home, an ideal location, and how long it will take to save for a down payment.
- Am I craving stability?
- Is location my top priority?
- Does this decision make sense for me financially?
- Am I prepared for the responsibility of maintaining a home?
Check Your Credit Score
Knowing your credit score will help you determine what options are available to you. Lenders use your credit score to determine how much you are qualified for, so if you have a good credit history, the higher the chances you’ll be able to secure your financing with the best terms and rates.
Take the time to understand how different credit score ranges impact your interest rate, monthly payments, and total interest.
Create a Budget
Setting a realistic budget will help you know what you can afford and how much the total cost will be. Unfortunately, the purchase price isn’t the whole picture; you need to factor in other costs; like, closing costs, land transfer taxes, moving expenses, property taxes so you understand what you can afford.
The best thing you can do before getting started is to build a budget and then add a buffer so that way if something unexpected comes up, you will be prepared.
Save for a Down Payment
To avoid private mortgage insurance (PMI), you’ll want to put down at least 20% for a down payment. Some lenders offer mortgages without PMI; however, they usually come with higher interest rates. By putting more down, you’ll lower your costs. Research down payment requirements for the loan you want so you know precisely the amount you’ll need.
Shop for a Mortgage
Getting preapproved for a mortgage is helpful when you make an offer on a home, and it gives you a handle on how much you can afford. Make sure to shop around with at least three lenders or mortgage brokers to increase your chances of getting a low-interest rate. Things to know: Work with an experienced mortgage lender who can show you all of the options and costs. Ask about what incentives are available to you.
Hire a Real Estate Agent
With an experienced real estate agent, you’ll save time and money. They can help you find your dream home and can negotiate with the seller on your behalf. Contact several real estate agents and ask to meet with them to discuss your needs before you decide to choose one. An agent with knowledge of the area can let you know if your budget is realistic, and they can point you to other types of considerations. Before hiring a real estate agent, interview them to find out their track record, knowledge of the neighbourhood. Agents can also refer you to other professionals like home inspectors, contractors, and appraisers, but it’s still important to look around for the best option for you.
See Multiple Homes
Looking at photos may pique your interest, but you should visit the property in person, so you get to know the home, neighbourhood, and amenities. Let your real estate agent know the specific homes you want to see. You may not be able to check off everything on your wishlist, so prioritize what’s important to you aside from location. Things to do: Drive through neighbourhoods that you like to see what’s for sale and attend open houses. Keep notes on each property you visit; it’s easy to forget after viewing several homes. Keep your schedule open so you can quickly jump on any new listing, this could help gain you an advantage over other buyers.
Make an Offer
Knowing how to make a competitive offer can increase your chances with the seller. Once you’re able to find the perfect home for you, your agent will complete offer packages; this includes your bid, your preapproval letter, proof of funds, and terms or contingencies. It doesn’t hurt to add a personal note to the seller to make your offer stand out. Things to know: A seller might counteroffer on the price, you can either respond or reject it and move on. Once an offer is accepted, you’ll need to sign a purchase agreement that includes the home price and the estimated closing date.
Get a Home Inspection
A home inspection helps you get an overall picture of the property’s issues. It will help you determine the ways to proceed with the closing process. You may need to ask the seller for repairs. Get recommendations for suitable home inspectors from your agent; do your homework as well. Depending on your contract, a home inspection may need to be completed 10 to 14 days after you sign a purchase agreement. As a buyer, you’re responsible for paying the home inspector. Things to do: To know if the home inspector has enough experience, read online reviews, ask for references, and look at their credentials. Take a look at the home inspection checklist to know what is covered and what isn’t.
Negotiate Repairs and Credits
The home inspection report could reveal some significant or minor issues. Anything major will likely need to be dealt with before a lender finalizes your loan, while minor ones can often wait until you take over the home. Enlist your agents’ help to negotiate with the seller; by getting them to ask the seller to complete repairs or give you a rebate at closing. Things to know: The lender may not approve the loan if there are structural hazards. Some sellers won’t agree to extensive maintenance, which is why a home inspection contingency is a good idea, as it gives you a way out of the purchase if things aren’t positive.
Acquiring the final loan approval means you need to keep your finances and credit in line during underwriting. It can take anywhere from 21 to 30 days to complete the financing approval process. Delays can happen when buyers don’t respond to disclosures fast enough or don’t provide the proper documents. Respond promptly to requests for more documentation and double-check your loan estimate to ensure the details are correct.
You may need to submit additional paperwork as your lender completes the process; these include:
- Bank statements
- Tax returns
- Additional proof of income
Things to know: A preapproval doesn’t mean you’re good to go; it’s only completed once the lender has given the final stamp of approval. Make sure to keep your finances and credit in check until closing day, and avoid changing jobs. Try to avoid running up any credit cards, taking out new loans, or closing credit accounts. By doing any of these, it can hurt your credit, which can hinder your final loan approval.
Do a Final Walk-through
A final walk-through allows you to view the property before it’s yours; this is your very last chance to see the home, ask questions, and address any issues before taking ownership. When viewing the home, make sure to bring a home inspection checklist and any other documents, to ensure everything’s completed as agreed upon and that the house is ready. Things to do: Speak to your real estate agent and ask them if they can be there as a witness, they can help answer any questions. If the repairs haven’t been completed, have your agent contact the seller and lender.
Close on your House
Once everything has been met, and you’re happy with the final walk-through, it’s time for you to make it official and finally close your home. Before the closing date, the lender will provide you with a closing disclosure that outlines all of the loan details. At the closing, you, along with your agent, the seller, and the seller’s agent, will be there; this is where you will complete the transaction. Things to do: Review the closing disclosure to compare it to the loan estimate to ensure closing fees and loan terms are the same. On closing day, make sure to review all documents you sign, and ask for any clarification needed. Make sure you have all house keys, entry codes, and garage door openers before leaving. Buying a home involves many complexities, this guide, along with your helpful agent, can assist you in navigating this process smoothly. By researching ahead of time, you can gain more confidence in buying a home. Good luck!
Buying a home is a major decision in your life, so let our amazing staff at easy Home Realty take care of your needs.
For more ways to help with your home buying, read “5 Red Flags You Should Look For When Buying A Home.“
To learn about our other buyer resources, check out our Buyer Toolkit.