Just like many other Americans, are you in dilemma as to whether you should rent or a buy a home? It’s a common issue that home buyers face as they try to understand which one makes more financial sense.
A lack of market knowledge drives many potential home buyers to hire listing agents, and they often end up paying higher prices than they should. They need a good realtor and a mortgage firm with a good track record for dealing in residential mortgages effectively.
You can follow the steps mentioned below for the purchasing and financing of your first home.
1. Get your credit score in order
Before you get into the home buying process, pull your credit report to check the credit score, outstanding payment like taxes, insurance, credit card bills, etc. Making payments on time helps maintain a good credit score, which increases the possibility of receiving a mortgage loan.
2. Consult with a lending firm
You can consult with a reputed lending firm that can help you understand the things to do in order to receive approval on your mortgage application.
3. Get Pre-Approval
Once you complete the tasks suggested by the lending firm, your pre-approval process will start. An underwriter will verify all of your financial aspects, and will determine how much loan is affordable for you.
4. Look for a home
You can consult with your realtor, and let them know about the pre-approval process. It will help the realtor to find a home in the price range specified during the pre-approval.
5. Loan Processing
After you find a home, and the negotiation with the seller is positive, your realtor will help you prepare a purchase contract specifying the sales and other conditions. Subsequently, the loan processing will begin. You need to submit the required documents to your loan officer, who will process those for loan approval.
When the loan processing gets underway, it would be ideal if you get the property inspected by a home inspector. If the home inspector identifies issues in the property, if may save a significant amount of money as repair cost in the future.
7. Underwriting and Closing
In the final phase of loan processing, an underwriter will verify the application for the final approval. The underwriter will determine whether the loan request is good enough for approval or to be rejected. If the application is cleared, the lender will schedule to close the loan, and will assist you to buy the home.
The Costs to Cover
During the home buying process, you need to cover three costs:
- Earnest Money – The deposit amount at the time submitting your purchase offer. It assures the seller of your seriousness to buy the property.
- Down payment – It is a part of the total cost of the home that you need to pay during the deal settlement.
- Closing Costs – The costs involved during processing of the paperwork when buying a house.
In order to get the entire loan processing completed in a seamless manner, it is key to select a lender that will make the whole experience of buying a home pleasant and easy-to-understand. Ask as many questions as possible to clear doubts before you begin the loan application process.