STEPS TO BUYING A HOME
While there are certainly more details involved, the following is an outline to help you understand the basic process of purchasing a home.
- Prepare by Managing Your Finances
- Maintain a good credit history (or make repairs if necessary)
b. Minimize debt
c. Save for a down payment: 3-20% of the cost of a home
d. Get an idea of how much you can afford by understanding your debt-to-income ratio
- Research Mortgages
- Understand basic loan types
b. Familiarize yourself with costs involved (points, origination fees, etc.)
- Find a Lender
- Work with someone you can trust
b. Find out as much as possible about how your loan is priced
c. Get the best deal you can
- Get Pre-Approved for Your Mortgage
- Pre-approval will provide you with a “budget”
b. When you find your home, you will officially apply for the mortgage and receive a Good Faith Estimate (GFE) of the final closing costs
- Find a Realtor
- Speak with multiple candidates
b. Interview clients from the recent past
c. Work with someone you can trust
- Go Home Shopping
- Is it the home?
b. Consider the commute, amenities, schools, etc.
- Make an Offer
- Your Realtor should help you determine what is reasonable
b. Don’t be afraid to barter
- Get Insurance Prior to Closing, options include
- Title insurance,
b. Homeowners insurance,
c. Flood insurance, and
d. Home warranties.
- Go to Closing
- Bring photo identification
b. Be prepared to review and sign a lot of paperwork, including the HUD-1 Settlement Statement (essentially the official “receipt” of the transaction; may differ from GFE).