The best way to start your house search is to work with a local sales agent who can help you navigate the home buying process. Here is a list of the steps you and your realtor should take when going through the homebuying process.
1. Make sure you’re ready
You not only need to be financially read, but also emotionally ready when it comes to purchasing a home. It is said that buying a house is one of the most stressful things to do when it comes to life events. With that being said, you are going to be at your home for a good amount of time so there are questions to ask yourself. What are your goals for the next few years? Are you going to be purchasing a home with a partner, if so, are you all in agreement on how much you want to spend? Is there a chance that you might need to relocate for work? Are you thinking about starting a family? These are big life questions that can help you determine if this is the right time to purchase a home.
2. Get your finances in order
Again this is one of the biggest financial decisions you will make in your lifetime. Before you take the plunge, make sure you are 100% financially stable. A great resource is a home affordability calculator. With this tool, you can help determine your budget by listing your income, debts, location and down payment amount. You can compare how much your mortgage would be versus how much income you bring in. This will help you keep your housing hunting to a home you can realistically afford. Along with this, check your credit score too. A high credit score will allow you to get a lower interest rate.
3. Make a plan for the down payment
After you figure out what you can afford, then you want to determine your down payment. The norm is to put down 20% but nowadays many potential home buyers are opting to put down less. The downfall to this is you will have to pay private mortgage insurance (PMI) when you put less than 20% down. Note that certain loans require a minimum downpayment. There are many programs out there that can assist with a downpayment.
4. Create a wish list
List some things you would love to have in your new home (a wish list). Things to think about when creating a list are, detached or attached unit, ideal location and move-in ready or fixer-upper. If you have a big family and pets, your best choice would be a single-family home with a yard. You will want to choose a neighborhood that best fits your lifestyle. If you love the outdoors, you should look for a neighborhood with tons of greenspace and walking trails. If you are good with your hands, then a fixer-upper could be right for you.
5. Find the right mortgage
There are several different types of mortgages. A conventional loan offers a low minimum down payment but is strict with qualifications. An FHA loan is backed by the Federal Housing Administration and is usually easier to qualify for but you will more than likely have to have mortgage insurance. A VA loan is backed by the Department of Veterans Affairs and is only for active or former service members. A jumbo loan is used when the home that is being purchased is more than standard lending limits. A renovation loan will allow you to combine the costs of your home improvements with the home loan. Depending on your situation and your credit score there is a loan that is right for you.
6. Find the right Realtor
Once you have your mortgage pre-approval and you know what you are looking for, it is time to find an agent who can help you with your search. You will want to interview several agents to find one that fits you. Professionals in the industry say that it is a good idea to at least interview three different agents. Word of mouth is a way to find an agent.