Okay, so you’ve had it with the one room apartment with the upstairs neighbor who can’t do anything quietly. You want a place that you can put a nail in a wall anywhere you darn well please without having to worry about non-refundable security fees. In short, you want a place that you can call yours.
But you’ve never done it before, this is a new frontier, maybe not where no man has gone before, but certainly out of your frame of reference. The thought of taking on a home loan that stretches over a third of your expected life span is a scary one, and not to be entered into lightly. So let’s look at the steps required to make you a homeowner.
Credit – In today’s financial world, credit is everything. Your credit score not only determines if you will be able to get a home loan, but exactly how much you’ll end up paying on that loan. You need to review your credit; get copies of your credit report from all three reporting agencies, Equifax, TransUnion, and Experian. If you find any errors, get to work to correct them right away, as it may take up to thirty days before changes actually appear on your credit statement.
You should also review your finances to determine how much of a home you can afford. Use an online mortgage calculator to help you determine a payment range within your comfort zone.
Mortgage Types – there are different types of mortgages, and every one has its pros and cons. Find the one that works best for you and your situation, based on how long you plan to own the home, available down payment, etc. Mortgages may be broken down into adjustable, fixed rate, balloon loans (which are only advisable if you plan on coming into a great deal of money in the next ten years or so), or government backed loans (as if we needed the government any deeper in our back pockets). There are other options to choose from as well.
Wish List – Okay, now you can get on to the fun stuff, namely sitting down and making a list of what you want in a home. Consider size, features, location, etc, and break your list into two categories, needs and wants. Having a list and checking it twice will keep you focused and help avoid getting sidetracked by elements that are unnecessary.
Secure A Real Estate Agent – much the same way I pick an auto mechanic based on the size of his tool box (the better he is, the more he’s gonna get paid, and the more toys he’s gonna have), I chose my real estate agent based on the huge billboard ads he had around town. I figured he must be doing pretty good. Look for an agent who has been successful at making a name for himself in your area.
Neighborhoods – narrow down two or three neighborhoods that look attractive to you. Be sure to research the quality of area schools as well as local crime rates. There may be a reason that home has a too-good-to-be-true price.
Pay A Visit – visit the houses that you like, and see what your impressions are. The key is to see if the home you are looking at feels like home to you. I wish there were a more scientific approach, but there it is.
Make The Offer – home and car sales are the two areas where you can negotiate price. Make an offer and be prepared to handle a counteroffer. Hopefully, you can reach an agreement with a minimum of back and forth. Your real estate agent will submit offers on your behalf and let you know if it has been accepted or not.
Pre-approval – this will let you know if a) you can buy a home, and b) how much you can realistically afford. It will also show sellers that you are serious about buying, which can be invaluable when there are multiple buyers or offers on a given property.
Home Inspection – Once you have found a home and made an offer, secure a home inspection. It will be $500 or so out of pocket, but when you consider the peace of mind it provides, then it becomes an invaluable service.
So go and find the home of your dreams. Making a good first decision now will only result in bigger and better things for you later on.
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