Buying a home is a little like a rollercoaster ride as it comes with plenty of ups and downs, but having a checklist can make the journey a bit smoother, and in the end, it’s usually all worth it. For those who have regrets, most are due to not understanding all of the costs involved, like maintenance and unexpected expenses, so the more you know, the better.
Creating a checklist will help ensure you know all of the steps to buy a house, eliminating much of the stress involved.
Determine How Much You Can Afford
Before you do anything, you’ll want to figure out a realistic budget to avoid wasting time looking at homes outside of your price range. Determine your debt-to-income ratio (DTI) meaning your monthly income versus expenses, considering all debts from car payments and student loans to child support. In order to qualify for a home loan from most lenders, your DTI shouldn’t be higher than 43 percent, but keep in mind, that’s the highest number, it doesn’t mean that’s a good idea.
Research Homes in the Area You’d Like to Buy
Search through real estate listings in the area you’d like to buy, taking notes of those you’re interested in, getting an idea of the prices. Keep an eye on those homes to determine how long they’re on the market and whether or not the prices are reduced over time.
Get Preapproved For a Mortgage
Before you start touring homes, you’ll want to be preapproved for a home loan, which gives you a competitive edge, especially important in a seller’s market. It will also tell you how much home you can afford with more certainty. Shop around, comparing details on the same type of loan, loan amount, and terms with commercial banks, credit unions, and mortgage companies. Get all the details such as the amount of the down payment that will be required, interest rates, points, and whether or not private mortgage insurance (PMI) will be required.
Look For a Great Realtor
Hiring a great realtor won’t cost you anything as those fees are usually paid by the seller and you’ll have a very important resource at your side. The agent should be experienced in the neighborhood or town you’re looking to buy in and be a good fit personally. Getting referrals from those you know and trust is usually the best way to find the right one, but you’ll want to interview the agent to be sure you feel comfortable with them.
Now that you have an agent you can start touring homes. Your realtor can provide advice on factors you might not have considered, like whether the house is in the right school district or if the home has been on the market for a while, which means you’ll have a better chance of getting a lower offer accepted.
Getting the Keys
Once you find the right house that meets your needs and budget, the agent will help you make the offer. When an agreement is reached, the home will go into escrow and then there will be an inspection and appraisal. The closing is the last step. That’s when all of the final paperwork will be signed, your lender will present the check to the seller, and you get the keys.