Beginning the home buying process without the proper information can cause delays and unnecessary stress. The good news is that you are not alone. Check out these six steps to buying a home before you begin searching the listings the perfect home.
Step 1 – Check Your Credit Score
The Fair Credit Reporting Act allows you to order a free copy of your credit report once a year from the major credit reporting agencies. Check the reports for mistakes and overdue accounts. Report errors to the reporting agencies and create a plan to resolve delinquent accounts. A home mortgage lender looks at this report to help them determine your credit worthiness. You want the credit report to present an accurate picture of your stability and reliability. In the months before and during the home buying process, refrain from making expensive purchases that require monthly payments. Added debt will impact your debt to income ratio.
Step 2 – Increase Your Savings
Most people are unable to pay cash for a home purchase. It’s completely acceptable to get a home mortgage loan. However, you’ll still need to pay money out-of-pocket for the down payment, closing costs, and moving expenses. A good rule of thumb is to have 20-percent of the selling price for the down payment and up to eight percent for closing costs. You won’t need to shed tears for saving too much money for the home buying process, but if you get caught short, you’re sure to feel the pain.
Step 3 – Choose a Real Estate Agent
Your real estate agent works hard to make everything as stress-free as possible. Choose an agent that listens to your needs, is knowledgeable about the local area, and communicates at a high level. Find someone who is more interested in your positive experience than on their sales number. A real estate agent who is honest and straight-forward provides you with the best chance for a successful transaction.
Step 4 – Apply for Home Mortgage Pre-Approval
Setting your sights on a beautiful home with all the amenities you’ve been dreaming of is fun, but it can be disappointing when you are search way outside of your target price range. Applying for a home mortgage loan is a wonderful way to find out exactly how much you can afford to spend. Knowing your target price range saves time and frustration. This pre-approval sends a strong message to sellers that you are coming to the table with a serious offer and can follow through with the sale.
Step 5 – Place an Offer on the Home
Putting in the right offer is one of the keys to home buying success. You want to impress the owner with your offer without overpaying. There may be other offers on the table, and you want yours to stand out above the rest. Listen to your real estate agent when it comes to setting an appealing offer. They have the experience you need on your side to catch the seller’s attention.
Step 6 – Reach Closing Day
The seller accepts your offer, and the home buying process proceeds to the next stage. The lender will schedule an appraisal and any needed inspections. Once the investigations are complete, and everything is in order, you will arrive at closing day. Celebrate this day! You sign any required paperwork, pay all fees, and collect the keys to your new home.
Your real estate agent is the best source of information about the local community and real estate topics. Give KLM Realty a call today at 319-372-1919 to learn more about local areas, discuss selling a house, or tour available homes for sale.