Steps in Buying Your Home
Being pre-approved at the beginning of your property search will save you and your REALTOR® a lot of time by focusing your search on properties that fit the budget set by your lender. After all, you can only purchase what your lender will finance.
Step 1: Begin to gather a down payment
Buying a new home (particularly for the first time) requires a mortgage, where a lender fronts you the money and you pay it back over time. The very first step every first-time home buyer should tackle is to figure out their finances. However, in order to get a mortgage, you’ll need some sort of down payment. So you will need to find out just how much you will need.
To avoid added fees, ideally down payments on a mortgage should be 20% of the home’s price, but if you don’t have that much of a down payment, don’t worry. A mortgage down payment can be as low as 10%, 5%, or even 0% for certain types of mortgages (e.g., VA loans or a USDA loan).
Step 2: Check those credit scores
In addition to having a down payment, you will need a decent credit score. This score outlines how well you’ve paid off past debts such as credit cards and college student loans.
A lender will check this score in order to estimate the odds that you will make good on your your monthly payment, too.
If a lender sees some late payments on your credit cards or other blemishes in your credit report, this can lower your odds of getting a loan with a great interest rate, or perhaps even jeopardize your chances of getting any loan at all.
So it’s essential to know your credit score, and take steps with those overextended credit cards and high-interest debts to get that improved score.
Step 3: Get your mortgage pre-approved
Before you start viewing homes, you should seek pre-approval from a lender. Ideally, you should meet with a few various mortgage companies.
You don’t want to look at homes that will be beyond your financial reach and put you at risk of defaulting on a loan. By meeting with a mortgage lender, they will help you target homes in your affordable price range. Lenders will evaluate your financial background—such as your debt-to-income ratio and assets—and use this info to determine whether to loan you money, and what size monthly payment you can realistically afford.
Mortgage pre-approval is different from mortgage pre-qualification. Pre-qualify, and you’re undergoing a much simpler process that can give you a ballpark figure of what you can afford to borrow, but with no promise from the lender. Getting pre-approved requires more paperwork, but it’s worth the trouble since it guarantees you’re creditworthy and can truly buy a home.
You can also take an additional step before meeting with a lender. Use a home affordability calculator that you can plug your information into and it will calculate the maximum amount you can afford as a monthly payment.
Step 4: Find a real estate agent
After getting approved you will want to contact one of our real estate agents at White House Realtors who will help you find the right houses, negotiate a great deal, and explain all the steps along the way in the purchase of your new home.
Step 5: Go shop for a home!
This is the exciting part! As a home buyer, you can view thousands of real estate listings right here on our site. Then ask your agent to set up appointments to see your favorites in person.
Make a list of your wants and needs to get started, and whittle down your options.
Step 6: Make an offer
Once you have found that dream home, it’s time to make an offer to the seller. Having a good real estate agent is essential to represent you in the purchase of your new home.