Wait! Before you Buy! – Buyers Checklist

Wait! Before you Buy! – Buyers Checklist

Are you ready to buy a home? First, you must be personally and financially prepared. Next, prepare yourself for the home buying process. It’s normal to have questions; you are about to make a big purchase. Use this checklist to help you complete every step of the home buying process. 

• Know Your Budget

The first step in purchasing a home is determining your budget. Look at homes you are interested in and can afford. Identify a realistic budget. Determine your debt to income ratio (DTI). The obligation to income ratio is your monthly expenses versus your monthly cash intake. To find your balance, you will take all the bills you pay divided by your gross monthly income. Recurring bills like student loans, car payments, child support payments, and anything you pay every month are included in your debts. When you calculate your DTI, it should be no higher than 43%. Your budget should also include breathing room so you will not have to worry about additional stress.

• Save Up For Down a Payment

It’s essential to have a sizable down payment when purchasing a home. If your down payment is 20% or more, you will be exempt from private mortgage insurance. Typically your lender would require you to have private mortgage insurance if your down payment was less than 20%. It makes sure you will not default on the loan. Another benefit of having a sizeable down payment is lower interest rates. That is because a lower loan to value ratio will decrease the lender’s risk. In other words, the bigger the down payment, the lower the interest rate.

• Pre-Approved Mortgage and Choose a Lender

Before you start looking for a home, shop for a mortgage lender or a mortgage broker to shop for you. Home sellers want to have confidence that you can and can purchase their home. The first step to that is preapproval. Next, finding a lender will help you choose the best loan type for you. Look at various potential lenders and choose the best one that can get you the best loan.

• Choose Your Home and Make a Smart Offer

It’s time to choose your home and make an intelligent offer. Selecting a home can be overwhelming, but your real estate agent will make things easier. Listen to your agent’s advice. For example, home locations and nearby school districts or homes that have been on the market for a while. Do not only listen to your real estate agent but also listen to yourself. Look at homes for yourself, look online, and visit them to better understand your tastes and needs. Once you find a home you like and want, make an intelligent offer on the house. Again, your real estate agent will shine at this moment. Consult with them to decide how much to offer on the home. Your bid will depend on the housing market, how long the house has been on the market, and whether there are other offers on the house. Remember that your submission is not just a number but includes terms such as when you can move in.

• Home Inspection

Although you will bear the fee, it is worth inspecting the home. The home inspection will protect you from unforeseen costs and liabilities. While examining the house, you will know how much roof life is left, if the foundation is falling, or if the electrical system is updated. You will find a minor problem but don’t worry. All home inspections do. Remember to get general home inspections but also consider specialty inspections such as mold. 

• Prepare and Close On Your Home

Once the inspection is over, prepare to close on the home. First, double-check your finances and be sure they are in order. Make sure your finances are ready to pay all costs due at closing. Avoid making purchasing or financial changes that can affect your credit score. During this time, your lender will have an independent third party make an appraisal of the property.  If the assessment is lower than the agreed-upon price, buyers can ask the seller to lower the price or assume cost due at closing. Once cost and payments are finalized, it is time to sign a lot of papers. Be sure to bring all documentation to your home closing. You will need identification, proof of insurance, checks, or a cashier’s check to cover closing costs, and bring your patience! Your real estate agent and mortgage lender will provide you with a specific list. Once papers are signed, and all expenses are paid, you will have the keys to your new home.

As you start purchasing a home, use this checklist as you go through the process. Know your budget, and don’t go over. Save at least 20% of a down payment. Next, get pre-approved for a mortgage loan and find a lender. Next, choose your dream home and make an offer. Finally, have a general and specialty home inspection; once you have completed the first five tasks on the checklist, prepare to close on your home. For more helpful real estate tips and blogs, go to nancyopensdoors.com.