How To Buy A House The Right Way
Buying a house is not just buying a residence for shelter. And you think to yourself that what are the process or how to buy a house? Think about the purchase in in-depth details and you will realize that buying a house is purchasing a long-term asset, which calls for you to be more careful about your choices. You need to be shrewd with the purchase process and never buy a house on a whim.
To aid in your purchase process, keep the following steps in mind:
Step #1. Determine Your Budget And Get Prequalified And Preapproved For A Mortgage
Before everything else, you should determine your spending limit. Lenders typically recommend that you look for a house that is not more than five times your annual household income if you plan to make a 20% deposit. However, every household is unique in the financial well-being and standing fronts.
As such, even the standard recommendation might not suit well with your particular needs and or circumstances. You need to take account of what is best for you based on your financial situation when delimiting your budget.
After determining your budgetary limitations, you should get prequalified for a mortgage. This process involves providing your mortgage lender a variety of information including your savings, your income, and your investment portfolio. With these and more information, the lender will tell you how much they can lend you a mortgage. This information is important as it will further help you determine how much you can spend on your house.
Step #2. Start Your House Buying Research Early
After determining what your expenditure limits are, consider exploring newspaper, magazine, and website listings. In the early stages, your interest should be to understand market trends. To this end, take note of the houses you might be interested in and track how long the listing stays on the market. Importantly, you want to track the changes in the pricing of houses over time.
Step #3. Recruit The Right Real Estate Agent
You need an experienced real estate agent as your right-hand man/woman in the purchase process. They will give helpful information that is not publicly available regarding neighborhoods and homes. Moreover, they also lend a helping hand when it comes to negotiations, buying process, and much more.
Step #4. Shop Around
You also want to shop around for a house within your price range. Do not purchase the first house you come across. Remember to take pictures and or videos of all the house your visit. While touring the various house take note to test the various systems, including the electrical and plumbing system. Also, take note of the state of the neighborhood including the state of the other homes, the traffic on the neighborhood streets, presence or absence of street parking, etc.
Step #5. Inspect The Home
Once you find a house that suits your budget and meets your needs, you should have the real estate agent negotiate the price of the house. When you reach an agreement, the house will go into escrow – a period of time allowed for both parties to close the deal.
During this period, have the house professionally inspected. You want to ensure you have an intricate understanding of the house you are buying. A professional inspection will reveal all underlying issues including structural damage and the things you need to fix.
Should the inspector notice any issues that need fixing, you can renegotiate with the seller or ask the seller to fix the issues before you go ahead with the purchase. Alternatively, you could withdraw from the deal.
Step #6. Closing The Deal
After inspecting the house, you should work with your bank to get a loan. Lenders will have a wide variety of loan products for you to choose from. Working with a mortgage banker will help you choose the best mortgage loan possible.
As part of getting a mortgage loan, the lender will have the house appraised, which will help you and the bank get an estimate of the value of the house, thereby ensuring all parties know that you are getting a fair deal.
During the entire process, the lender will have appointed a title company to coordinate the paperwork. The title company will ensure the seller is the rightful owner of the house and ensure all the paperwork is in order.
The last part of the process is closing the sale. Once your loan is funded and you deliver a check to the seller, you can move into the house.