Buying a home is a major commitment and one of the most important investments you will ever make in your life. Although exciting, buying a home in can be an overwhelming process requiring a lot of time, effort and money.
Before searching for your dream home, you will want to ask yourself are you really ready to buy a house? Most home seekers naturally begin thinking about their wish-list and finances, not realizing that there are so many important aspects and prep work to consider. As your REALTOR® , we will make your home buying experience a smooth and manageable process. We have provided our valuable guide “6 Steps to Buying a Home” to help ensure that you make the best decision for you and your family.
The top 5 pre-closing tips for buyers guide can help prepare buyers for pre-closing procedures, ensuring a smooth closing with no delay.
6 Steps to Buying a Home
Whether this is your first time buying a home or you are just shopping around, we have information that will help you prepare for the home buying process.
Before shopping for your dream home, we want to make sure that you are ready to buy a house. When buying a home, people naturally begin thinking about their wish-list and finances, not realizing that there are so many aspects to the home buying process. Credit, the housing market, the time of year, even lifestyle needs are a few other components home seekers should evaluate when buying a home.
Evaluate your finances and credit.
When buying a home, have your finances in order. Make sure your income source is stable and reliable. Calculate your budget given your income, debt, savings and other financial obligations. Do not skip out on filing taxes.
Taking steps to improve your credit score and reduce your debt can mean better loan options and lower interest rates. Review your debt-to-income (DTI) ratio to ensure that you can comfortably make your debt payments and housing-related expenses each month. Refrain from doing anything that would lower your score, as lenders check your credit more than once during the home buying process. We recommend you save save save to cover both your down payment and closing costs.
Utilize our free mortgage calculator to get an estimate on your mortgage payments. Let’s discuss your financing options.
Evaluate the housing market and the economic outlook.
Now assuming that you have your finances under control, you must decide whether buying a home make sense from a financial standpoint. Is it cheaper to rent or buy? If buying a home, how long do you plan on staying? When is the best time of year to move? If you have plans on selling later down the line, will you receive a return on your investment? The key to seeing a return on your investment is to buy low and ride the wave on out.
Buying a home is a major financial commitment, therefore knowing how long you will be living there is important. You don’t want to get stuck buying a home you are unable to afford, in a city you no longer want to be in. We suggest living in a home for some years before selling your property.
The time of year is important to consider when buying a home. For the widest variety of homes, the Spring time may be the best time to go house hunting. The school year is coming to an end and families are looking to settle before Fall. For more flexibility in prices, the Winter time is a good time to shop around. Some buyers like to make offers around the holidays due to lack of competition and possible deals.
Consider your Present and Future Lifestyle Needs.
Is your need for extra space imminent due to a new baby? Will your children have to change schools? Do you pay for a personal trainer? Do you travel frequently? If so, when buying a home, you will need to subtract these costs from your mortgage and debt payments. If your debt-to-income ratio is higher than 50% when including these items, you may want to consider either cutting back on some activities or searching for a less expensive home.
Once you have decided that you are really ready to begin the process of buying a home, contact us so that we can get you started. A REALTOR® is an important partner to have when buying a home, as we help you navigate and understand the ups and downs of the home buying process. We love saving you time and emotional energy by locating homes that meet your criteria. Once you have chosen a home to buy, we can assist you in negotiating the entire purchasing process, including making an offer, getting a loan, and completing paperwork.
Hire one of our realtors.
Vetrice Barber, a Metro Detroit REALTOR® is a Detroit native, who is down-to-Earth, knowledgeable of the area and has a proven track record of successful closings. She makes it a point to be there for her clients from the start all the way to the finish line. Vetrice expertise protects home buyers from any issues they may encounter during the process of buying a home.
Well, don’t take our word for it. Read testimonials from home buyers who have had the pleasure of purchasing their dream home with her. And best of all, it doesn’t cost you, the buyer, a penny to utilize our expertise and resources, as we are compensated by the commission paid by the seller.
Now that you are confident about buying a home, you can meet with a lender to discuss different loan options, current interest rates and the amount you will be able to borrow. Once you find a loan that best fits your needs, get preapproved for a mortgage.
How to get preapproved.
Before a mortgage banker lends you any money, you will need to get preapproved for a mortgage. To get preapproved, you will need to apply with your lender, whom will verify your financial information and submit your loan for preliminary underwriting. Once approved, you will receive a preapproval letter from your lender stating how much money you are approved to borrow based on your credit, assets and income. You can show your preapproval letter to your REALTOR® so that they can help you find homes within your budget. Having a preapproval letter in hand when making an offer on a house lets sellers know that you are serious about buying a home.
Choosing the right mortgage loan.
There are multiple types of mortgage loans available to choose from when buying a home. Adjustable-rate or fixed-rate? Government-backed or conventional? 15-year term or 30-year term? Knowing your options can help you make the right financial choice because bad financing can turn your biggest asset into a liability. Choosing the right type of mortgage can boost your chances of approval and/or save you thousands of dollars in the long run.
Now that you know what your qualifications are for buying a home and have a REALTOR®, the fun begins: finding your dream home! Search homes here.
Begin your house hunt.
Create a list prioritizing your must-haves and stating your deal-breakers. Utilize all options available to you on your house hunt. We will help you set realistic expectations and narrow your search to areas you can afford. You can also search online for listings and drive around neighborhoods of interest to you. Request that your family and friends keep an eye out for properties for sale that may meet your criteria.
Some things to consider for your wish-list when buying a home:
- Style of home
- Square footage
- Walk in closet/storage
- Number of bedrooms and bathrooms
- Backyard/swimming pool
- Home condition
- Access to public transportation
- Local entertainment options
- Local school district ranking
- Property value trends
- Crime rate in neighborhood
Take plenty of notes as we view different properties. If you are on a budget, we will view homes whose full potential has yet to be realized. The house may have one bathroom instead of the two on your wish-list, but it meets other needs and is affordable. When looking at properties, make sure that lights, plumbing and doors are functioning properly. Evaluate the neighborhood, paying attention to the maintenance of other homes on the block and the amount of traffic on the street.
Make an offer on a home.
Once you find a home that you are ready to make an offer on, we will help you prepare a complete offer package based on the value of comparable homes in the neighborhood. The offer package will include your name and address, offer price, your preapproval letter, proof of funds for a down payment, terms or contingencies and deadline for the seller to respond. Adding a personal letter to the seller can help your offer stand out.
The seller will either accept your offer or issue a counteroffer. You can then accept, or continue to go back and forth until you either reach an agreement or decide to walk away from the offer. As your REALTOR®, we will advise you on when to give in and when to hold firm on an offer. Once you and the seller have reached an agreement on a price, the house will go into escrow.
Tip: Being preapproved with your lender and having a flexible closing date can help make your offer strong.
Get a home inspection.
A home inspection is one of the most important precautions you can take before buying a home because it keeps you from being blindsided by expensive repairs. We will refer you to a home inspector who will go through the home specifically looking for problems. They will test electrical systems, check the safety of the roofing and foundation and much more.
After the inspection, the inspector will give you a list of problems they found within the home. If the inspection reveals major mechanical or structural issues with the home, we can ask the seller to fix the problem, reduce the price, or you can withdraw from the offer and receive your deposit back. Any major issues found after buying a home will be at your expense.
Get an appraisal on the home.
An appraisal evaluates the value of the home you want to buy. It is required by lenders because they are unable to lend out more money than the house is worth. If the appraisal just so happens to come back lower than the offer price, you may have trouble getting financed.
Request repairs or credits.
If the results of your inspection reveal that there are issues with the home you want to buy, those issues will need to be dealt with before your loan is finalized. As your REALTOR®, we can negotiate your request with the seller. You can request a discount on the purchase price, credits towards the closing costs or request for the problems to be fixed before buying a home.
The seller may or may not accept your request. If your request is rejected, you can either bite the bullet and repair it yourself after buying a home or you can utilize the inspection contingency if in your offer letter. The inspection contingency allows you to walk away from the sale and receive your deposit back.
Do final walkthrough.
The final walkthrough allows you to ask any questions and address any outstanding issues before buying a home. Bring your inspection checklist to make sure everything was repaired that was agreed upon and that the home is in move-in ready condition. As your REALTOR®, we will speak with both the seller and your lender if the repairs requested are not fixed, as this may delay closing on the home.
Apply for a mortgage.
Once the seller accepts your offer, it’s time to apply for a mortgage and get the final loan approval. There are a wide variety of competitively priced loan programs available when buying a home, so we will help you pick the one that best fits your needs. After you submit the application, your lender will send you a loan estimate to include your approximate interest rate, monthly payment and closing costs. Your lender will then request for you to verify your income and assets. Respond promptly to requests and double-check all documents given to you.
Tip: Keep your finances and credit in tact during underwriting. Refrain from opening lines of credit or changing jobs once you are under contract, as changes in your financial situation can jeopardize your loan process.
Once all terms and contingencies have been met, you are satisfied with the results from the final walkthrough, and the closing agent gives the green light to close, you are now ready to close on your dream home.
Once you are cleared to close on your home, the lender will issue a “clear to close” status on your loan. Three business days before your closing date, your lender is required to give you a closing disclosure outlining all of your loan details, to include your monthly payment, loan type and term, interest rate, annual percentage rate, loan fees and the amount you will need to bring to closing. As your REALTOR®, we will sit with you and go through your closing disclosure to make sure the numbers don’t vary too much from your loan estimate. If anything seems off, inform lender.
At closing with all parties involved, you will sign all of the paperwork required to complete the purchase of your dream home and pay your down payment and closing costs. Paperwork to include a settlement statement and loan documents. Bring your ID, a copy of your closing disclosure and proof of funds for your closing costs. After paperwork is returned to the lender, it will take a couple of days for the loan to be funded to the seller.
After closing finishes, the home is yours! CONGRATULATIONS!!! You are officially a homeowner! The process of buying a home may not be easy, but having a beautiful new home to call your own is worth it in the end.
*Vetrice Barber is a REALTOR® at eXp Realty. No guarantee, warranty or representation of any kind is made regarding the information on this blog. All information should be independently verified. Vetrice Barber and eXp Realty expressly disclaims any liability in connection therewith.
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