Buying a home, whether your first one or not, is a long and arduous process. It requires care, thoughtfulness, and preparedness. If you rush into it, there is a high possibility you will regret doing so.
In this guide, we will provide you with tips that can make buying a home easier and smoother.
Let’s get started!
1. Assess Your Finances
The first thing to do is to examine your finances. This includes going over your credit score and reports, inspecting your budget, and evaluating your ability to make a down payment and cover the closing costs. It also includes analyzing your debt-to-income ratio (DTI), which is the amount of debt you owe relative to what you earn.
2. Decide Your Preferred Mortgage Plan
There are numerous mortgage types: the Fixed Rate Mortgage (FRM) and the Adjustable-Rate Mortgage (ARM) are two examples. The fixed-rate mortgage plans usually have slightly higher rates that never change. Thus, you know what your monthly payment will be throughout repayment.
The adjustable-rate model, on the other hand, starts with lower rates that last a specific period, like five or seven years. After this period, the rate will increase or decrease at a predetermined interval, which could be once or twice a year. In other words, adjustable-rate mortgage plans will raise your monthly repayment in the future.
3. Get Quotes from Multiple Mortgage Lenders
Mortgage rates differ among lenders. To get the best deal, ask for quotes from three or more lenders. Thereafter, choose the lender that offers the best mortgage rate and services. (Remember that rates change regularly; for this reason, choose your preferred rate early and reach an agreement with the lender.)
4. Get a Mortgage Preapproval and Find a Realtor
Mortgage preapproval is a preliminary commitment offered by a lender to loan a certain amount. It is important to get a preapproval before you start shopping as sellers won’t consider your offer if you are not financially ready.
Subsequently, once you get your preapproval, hire a realtor. Given they would have some familiarity with the neighborhood, they should be able to provide valuable information about the neighborhood and its environs that will help you decide.
5. Shop for a Home and Make an Offer Fast
Now that you have a realtor, it is time to go home shopping. Inform your realtor about your preferences, preferred location, and budget, among others. Further, visit and inspect the house in person to ensure it meets your expectations.
Once you make the offer, it can be accepted, rejected, or countered with a higher offer. Confer with your realtor to determine the best course of action.
6. Hire a Home Inspector
If your offer is accepted, hire a home inspector to examine the property. They will inspect the roof, structure, heating, electrical and plumbing systems, etc. And then give you a comprehensive report on the findings.
Ensure that you and your realtor are present when the inspector is examining the property.
7. Get Homeowners Insurance
Most mortgage lenders mandate that their clients have homeowners’ insurance as it protects you and the property. As such, evaluate your insurance needs and ensure you buy enough.