Buying a home can be a complicated, frustrating process. Here are 10 steps to help you navigate finding your new home.
Step 1: Check your credit report and score
Before contacting a lender, it’s smart to check your credit report. By law, you can get a free report once a year through Annualcreditreport.com. The report pulls data from the three major credit-reporting agencies: Equifax, TransUnion and Experian. Having the information in hand before you talk with a lender lets you dispute any errors in the reporting. Based on your credit report, Fair Isaac & Co. (FICO) assigns you a credit score ranging from 350 to 850. The higher your credit score, the lower the interest rate on your mortgage. Scores are based on:
• Payment history: Have you paid your bills on time?
• Amounts owed: What is your overall debt?
• Length of credit history: How long have you been borrowing money? Mortgage lenders like to see a long credit history.
• New credit: Have you applied for new credit?
• Types of credit: Lenders like to see a variety of types such as bank cards, car loans and student loans.
So what is a good credit score? You can expect a good mortgage rate at anything above 720. Home buyers who pursue an FHA loan can usually secure a loan if their credit is 580 or over. FICO scores are available at www.myfico.com for a one-time or monthly fee.
Step 2: Figure out how much you can afford
Just because you can qualify for a larger mortgage doesn’t mean you want to have that kind of payment each month. Use the mortgage affordability calculator to help determine what you can afford or you are comfortable paying each month. Now is also a good time to research your housing market and start going to open houses in your prospective neighborhood. This will give you a good sense of what you can purchase in your desired price range.
Step 3: Contact Jean as your Realtor!
I will be your lifeline through the process. I am your chief advocate, confidante and hand-holder in the process. I am a full-time Realtor and have a proven track record, please feel free to look up my reviews!
Step 4: Get pre-approved by a lender
It’s a smart move to get pre-approved for a loan before you start your official home search. I have lenders who you can trust to work hard for you! But, as always, you are free to choose any lender you like. Just be sure they have a Florida branch and have a history of positive customer ratings. Your lender will work closely with you from pre-approval to closing and will help you navigate any financial speed bumps along the way.
Pre-approval requires the lender to pull the credit information (see Step 1) and asses your financial situation. The lender will then give you a letter that states the amount they would be willing to lend you. It’s best to get loan estimates from a couple of lenders to compare their loan programs and fees.
Step 5: Start looking at homes
Let the serious shopping begin! By now we’ve talked things over and you know what you really want and need in a home. Armed with this, your price range and knowledge of the local area, we will set up your online home search and hit the ground running! Throughout your search, you’ll discover some new things to love or hate about homes and we will refine your search accordingly.
Step 6: Make an offer
For most buyers, this is when it gets exciting! Once you’ve found a home, I will work with you to craft an offer. Remember, the listing price is only a starting point. I will research the market and help guide you to make the most attractive offer, whether it’s below, at or above listing price. Are there any contingencies to your offer? Will you require an inspection? These are all things I will help you with. Once you’ve submitted the offer, we wait until we get a reply (as specified in the offer). You may get neither a simple yes or no but a counteroffer to consider. It can get interesting but, keep in mind, this is all part of negotiating!
Step 7: Home inspection day
If your offer called for a home inspection, this is a big day. Your home inspector will look over the home to make sure there are no unseen defects that you want to negotiate to have fixed. But also, this is the most time you’ll get to spend in your new home until closing. Go ahead and start measuring things and figuring out what goes where. This may be the last time you are inside the home until it is yours, several weeks from now.
Step 8: Get insurance and establish utilities
If you already own a home, simply call your insurance agent and let them know you’re buying a new home. They will handle writing a new policy. If you don’t have an insurance agent, I can recommend a couple. But, now’s the time to find one because your lender will require homeowners insurance. Even if you don’t have a mortgage, insurance is a critical part of protecting your investment. You’ll also want to give utility companies your move-in date to establish service. There’s nothing like moving into a cold, dark house because you didn’t get an account with the power company!
Step 9: Closing day
This is the big day! You will sign read and sign a lot of documents. Even though you’re just sitting around a table, it can be tiring. But it also means you’re nearing the finish line!
Step 10: Get the keys and move in!
This is it, we did it! You are now a homeowner! Your sale contract will specify exactly how soon you get to move in. Sometimes it’s on the day you sign the closing papers, sometimes possession happens a few days after closing. Whenever it is, you’ve just ended the adventure of home buying and started the adventure of home ownership!