| Home Buying Process Tips
Before looking for a home, decide how much you can afford to spend. One general rule of thumb is that a family should not spend more than 28 percent of gross monthly income on housing. Consider all other debts when assessing what you can afford. While lenders generally require a two-year, steady work history, you may still qualify for a loan if you have not worked continuously during that period and there is a good reason. A pre-qualification will help you determine the amount a lender would extend to you.
A real estate professional can help navigate the home buying process. An agent or broker will obtain information on properties listed for sale in the area, usually by consulting the local Multiple Listing Service (MLS). He or she can also set appointments for you to view homes that are of interest, help narrow choices to homes that meet you needs, explain the local market and help negotiate with the seller.
Be sure you understand whom the agent or broker represents during the process. Laws vary from state to state, so clarify the level of service the agent can give.
Most mortgage lenders will provide a pre-qualification free of charge and with no obligation.
Choosing a home involves a great deal of selectivity. Do you want a condominium? A detached home? Do you prefer one store or more? It is helpful to make lists of features you require and prefer - as well as unacceptable features for your home.
Location is a vital factor in selecting a home. Think about work commuting times, how close schools are for your children, and if conveniences such as grocery stores and dry cleaners are nearby. Also consider crime statistics, whether there is heavy traffic in the area and if the area is susceptible to flooding.
Try to buy in the best area that your family can afford. Look at all the homes in the neighborhood, as the value of the home you are considering should be close to the value of an average home in the neighborhood.
You may choose to set the offering price based on comparable homes on the market, or you can have a professional appraisal done. At this point, a real estate professional's assistance is especially valuable. Once settled on a price, you will have to put the offer in writing. This is called a purchase contract or purchase agreement, which will be presented to the seller. Earnest money - or money indicating the seriousness of your offer to purchase - may have to be put down with the contract. If the seller rejects the initial offer, you may receive a counteroffer, which marks the beginning of the negotiation phase of the purchase process. Once you reach an agreement, you will likely require a lender.
Unless paying the full purchase price of a home in cash, you will need to borrow funds from a mortgage lender. In exchange for giving you the funds to purchase the home, the lender will place a lien against the home, allowing the lender to foreclose if payments are stopped. The down payment required to purchase a home may be as little as 3 or 5 percent, or as much as 10 or 20 percent, depending upon the mortgage loan you choose. There are many types of loans including fixed-rate, adjustable-rate and convertible mortgages, as well as various time periods - although 30-year and 15-year mortgages are the most common. Shop around for the loan that is best for your situation and focus on factors such as interest rate, points and processing costs.
Lenders generally require a down payment of between 3 and 5 percent of the purchase price of a home.
After signing the purchase agreement, several steps occur before you obtain ownership, including inspections, title search and examination. When all parties are satisfied, the closing date is set.
It is at the closing that the actual ownership of the house is passed from seller to buyer. The loan will also be closed at this meeting, so there will be two closings in one. Everyone involved in the sale of the home is usually present at closing, including both buyer and seller, their attorneys, the real estate agents or brokers involved, and the closing or escrow agents. The closing usually takes place at the title insurance company's office, lender's office or an attorney's office. You will have to pay about 3 to 10 percent of the purchase price of the house in closing costs. After closing, the escrow or closing agent will file the mortgage and deed at the local county clerk's office. After recording information is received, the title insurance agent or attorney will write the tittle insurance policies and forward them to you.
Now, take a deep breath and enjoy your new home.
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