Over 60% of the American population are homeowners. If you’re part of the 40% that rent, you may look at that 60% number and feel like you’re missing out.
Frankly… You kind of are.
Being a homeowner carries a number of financial and perceptual benefits that are well worth the cost of buying in many cases. That truth is why we’re seeing so many first time home buyers crop up in the last 5-years or so.
When you’re looking to buy your first home, the process can seem a lot more overwhelming than renting. To make things simple, our team has laid out a handful of simple steps to buying a house that you can follow in order to simplify your experience.
1. Make Sure You’re Ready
The prospect of purchasing a home sounds good to most people. The reality of home ownership though comes with a handful of considerations that you should be aware of.
For example, when you rent, maintenance is the responsibility of the property owner. When you own, everything falls on you.
Roof leaking? You have to pay general contractors to get it fixed. Trees overgrown? You’ll have to hire an agency to get them chopped.
All of these small, unforeseen experiences can run up quite a tab throughout the year. If you’re not prepared to manage that tab, you may find yourself losing your home faster than you would have thought possible.
2. Determine If Now Is the Best Time
Even if you are ready to shoulder the responsibility of home ownership, it may be that your timing is poor from an economic standpoint.
Housing markets become inflated which cause prices to skyrocket. Buying during that time could make it so you’re upside down on your mortgage if the housing market corrects itself.
Also, if the economy is unstable from a jobs perspective, buying into a home might be a bad move. Setting aside a large down payment and then losing your job could lead to financial catastrophe.
Sometimes, the best thing to do when buying a home is to exercise patience.
3. Understand What You Might Qualify For
One of the most important steps to buying a house is qualifying for a home loan. If you’re flush with cash, you can skip this step. Most people though will need financing to purchase the house of their dreams.
You can quickly compare lender rates and offerings online to see how much home you qualify for and what your interest rate would be.
If you find a deal that looks good to you, fill out an application and see if your loan officer will give you their stamp of approval.
Qualifying for lending can be difficult, especially for people that have unconventional work situations (self-employed for example) so don’t get discouraged if you get no’s the first couple of times.
4. Less Is More As a First Time Buyer
When you apply for a loan, you might get approved for $300,000. Just because you’ve been approved for that much doesn’t mean that you should spend that much though.
Getting trigger-happy and overspending on a house could make your finances tight. While you may be able to weather that pressure today, consider what would happen if you lost your job for 6-months.
Always plan for the worst when home buying and pay for a house that falls below what you can comfortably afford.
5. Partner With a Good Realtor
Your realtor will make your steps to buying a house process a thousand times simpler. They’ll be able to set up home showings for you, they’ll negotiate on your behalf and they’ll be able to answer any questions that you may have whilst shopping.
Not all realtors are created equal so try to partner with one that really comes off as professional and has references to prove their track record of success.
6. Start Shopping
With your realtor in-tow, you can now go through your shopping process.
As you shop for houses, keep an open mind.A house that might be in a slightly different area or might have one less room than you were looking for could present you with a great deal that’s too good to pass up. Similarly depending on the area apartments might offer better value, for example waterfront Townsville apartments offer idealistic views at a great location and are a fraction of the cost as a house in the same area.
Be sure to let your realtor know what you’re looking for but also let them know that they’re free to surprise you with the occasional unconventional choice.
7. Put Together an Offer With Appropriate Contingencies
Found the house of your dreams? Perfect!
Put down an offer and ensure that your realtor stipulated appropriate contingencies.
A must-have contingency, particularity if you’re buying your house with a loan, is that the home pass inspection. Home inspections are paid for by the seller so this shouldn’t represent any additional cost to you.
Listen to your realtor and include any other contingencies that they feel won’t break the deal and will provide you with an extra layer of comfort.
8. Prepare For Escrow
Escrow is a final waiting period where all parties involved will ensure that all elements of your home buying deal are in good shape. This process can take around a month (maybe longer).
Be patient during this process and be sure to answer any questions that are asked of your promptly to expedite your road to closing the deal.
Wrapping Up Our Steps to Buying a House
Once escrow ends, your steps to buying a house journey is over! You’ll sign your final paperwork and move in.
By far the most complicated step of this process is getting solid funding so be sure that you’re ready to prove your income and have a good credit score before filing home loan applications.
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