“Home” is a word with various meanings for anyone, but everyone needs a place to call their own. Everyone has dreams and aspirations about a place where you want to live or what your dream house should look like. Be it an envied prominent house in LA or a simple bungalow farmhouse in Austin, owning a home takes in more of reality than a dream.
Most people start by choosing where they want to live before considering the means of affording it. Some jump in early with mortgage applications without even considering the HUD loan options like an HUD 223(f) or an FAH 221(d)(4) loan that could work for them. Consider the following steps to help guide you in your first endeavor to buy a house
Check your credit score
A good credit standing increases the chance of approval from a mortgage or housing loan application. Apart from credit score and credit history, your current annual income also plays a factor.
Figure out your budget
Find a figure that you are comfortable to spend for a house. It’s not about how much you would pay, but keeping in mind other things you would need money in for home improvements (furniture, fixtures, etc.). While some loans require a certain percentage of your income to be spent or considered to be paid for a house, you also might want to avoid taking in loan offers that would put you on a compromised situation.
Save money for a down payment
This is where you would need to prepare unless you have already done it before prospecting. On the average, mortgages require 20% down payment, and this is the part where you might consider HUD and FAH loans (with pros and cons) that can help you bring less money on the table.
Get pre-qualified for a mortgage
Once you have an idea of how much you are willing to spend, it’s time to apply and get prequalified for a mortgage. The mortgage banker will require your financial information and give recommendations on the price range you should check. They will also give you an idea of how much they can lend you.
Make a list
A good home is as good as a good neighborhood. Make a list of what you want to have in and around the house you are looking for. You may want to be close to hospitals, schools, convenient stores, or whatever it is that you like. List down specific house requirements like a backyard, a front yard or the number of T&B that you want.
Find a real estate agent
A real estate agent can give you access to information on houses and neighborhoods that are not publicly known. This is where your list comes into play. They will do the negotiating for you and you don’t need to pay them since they get the commission from the seller.
Find your house and do inspections
After a good talk with your realtor, he will start scheduling for you to visit and inspect his recommendations. Take your time to scrutinize everything during inspection. If you are not familiar with plumbing or electrical stuff, find someone who can help.
Make the offer
Once you get to choose your future home finally, work with the realtor to make the offer based on the other available options around the area. The lender may offer an appraisal service to make sure that you and the seller will have an idea on the fair market value of the property before you make an offer. After an agreement has been reached, the property will go into escrow. An escrow is a period where the remaining steps of the home buying process take time to complete.
Finish the paperwork
Tedious as it may be, buying a house has a lot of legal papers involved to complete the transfer. Your lender will arrange most of the process and will have a title company handle all the paperwork. They will also be the one to check and make sure the house you are buying is in an excellent legal state and if the seller has all the rights needed to sell it.
Close the sale
After signing a deed of sale, loan documents, and all other pertinent documents, your lender will usually take a couple of days to fund your loan upon receipt of all the paper works. A check will be issued to the seller and you are now able to move into your new home.
Remember to do extensive research and a self-assessment before deciding to buy a house. It is not something that you often do, and moving in and out can be a tiring process. The work is not done after acquiring your new house, so be sure to remain up to date with your loan payments and transform your dream house slowly as you go.