Buying a new home is both exciting and terrifying at times. If you have never purchased a home before, you will soon realize that this is a very important decision. Purchasing a home is a big step. However, when done right, you should have little to worry about. You should consider these tips to ensure that you are making a good choice during your home buying experience.
Prequalify
Prequalifying for a loan will ensure that you’re ready to start the home buying process. This doesn’t necessarily mean you are taking the loan, but it’s the best way to get an idea of what your price range really is. Many realtors will require you to have a pre approval letter before they begin working with you. However, if you are looking at buying a home without a realtor, you still should take this first step.
What Do You Need to Prequalify for a mortgage?
- Credit
- Equity
- Income
- Assets
There’s a lot that you’ll need to get approved for a mortgage, but ultimately pre-approval comes down to credit, equity, income, & assets. It’s also a good idea to start getting all of your legal documents together: tax records, proof of residence, bank account statements, etc.
Finding the perfect home
Once you’re pre-approved, don’t rush the process. If you’re nearing the end of your lease, most landlords will allow you to rent month to month. Be sure to contact your landlord or leasing provider in advance, so that you can have a plan in place. Once you have your current living situation sorted, you will have peace of mind about moving on to your next, and more permanent solution. Be sure to ask yourself what is important to you in a new home and even make a list. This will allow you to find a home that will check those boxes. For example, some people love to entertain and will want a large porch to entertain on. While others like to cook and read, a cozy reading nook is their priority.
Home Inspection
Once you have found a home in the area that you like, you will need to get a home inspection that will tell you what is wrong with the home. While some things will be obvious, others might not be. Don’t take any shortcuts when it comes to the inspection. Be sure that you find a qualified home inspector that can go over everything for you and give you a detailed report. Take the time to really review that home inspection before you are at the closing table. This can save you a lot of headaches later. What fixes are you willing to make yourself, which conditions will you put on the sellers to repair before closing, and what’s your plan if the buyer refuses?
Home Appraisals
After the home inspection, comes the appraisal. This will be from a third party that will evaluate the overall value of the house. They do a look-up on the various homes in the area and what they have recently sold for. This will ensure you are not paying too much for the home. It’s possible that your mortgage company won’t lend more than the appraisal value of the home. The appraisal will also take into account various repairs that you might be taking on when you purchase it as well.
Last Walk Through
Most will offer a final walk-through within the last 24 hours, take advantage of that. It is important to ensure the last owners didn’t take off with the kitchen sink or leave any unexpected surprises. Most of the time all is well, but you can never be too cautious – this is a big purchase!
