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Buying a home can be an overwhelming process. Whether it's your first home or your fifth home, you have a lot at stake and have many decisions to make before signing on the dotted line.
I want to share with you my Seven Steps for Home Buying Success plan. In this plan, you will learn how to separate whims from true needs, how to research effectively, choose wisely, finance appropriately, and survive the home buying process with a smile on your face.
Step 1: Establish your needs and wants
Begin your home search by making a careful assessment of the kind of home you need and want. Create a list of the specific features you would like to see in your next home.
First, list the necessities—the things you must have in your next home. Then list the additional features you want—the things that would be nice to have. Prioritize your list.
Have everyone involved in the home purchase decision create their own list. Once the lists are completed, compare each person's list. Look for areas where you have agreement and areas of difference. Determine where you can compromise and what features you can and can't live without, so that everyone is on the same page. Investing time at the beginning of the home buying process to define your needs and wants will result in more peace of mind later on.
Step 2: Determine how much you can afford
Knowing what you can afford is every bit as important in the home finding process as what kind of home you're looking for. Affordability includes three things; how much you will need to borrow, how much you have for a down payment, and what payment you're comfortable with each month.
Set a budget for yourself and decide how much you are comfortable with and how much you can afford to invest. Be realistic. Most lenders suggest that your payments be no more than 28 percent of your total monthly income. Don't forget to include taxes and insurance if you plan to escrow.
Step 3: Find a good real estate agent to help you
Your real estate agent can be your most valuable asset in the home buying process. Their expertise and know-how can help you find a good lender, locate the right home, get you through the negotiating process, and manage the steps from contract to closing.
Get references from friends and family and ask whom they would recommend. Make sure you interview several agents. Ask as many questions as you can up front. Ask about their experience and what they will do to help you find the right home. Ask them to explain the steps in finding and buying a home, and how they will represent you throughout the home finding and buying process. Within a few minutes, you will probably be able to determine if an agent's style is in line with yours.
Finding a good agent will save you huge amounts of time, effort, and frustration.
Step 4: Get pre-qualified or pre-approved by a lender
You can save yourself time and heartache by meeting with a lender before you start your search for a home.
A lender can let you know what specific loan programs are best for you and help you to understand what it takes to qualify for the loan. By taking a look at your financial situation and looking at your credit history, a lender can give you a good idea of the loan amount in which you qualify for. Many lenders call this process "pre-qualifying the buyer."
To make certain that you can be approved for a loan, you may want to be "pre-approved." In the approval process, all of your documentation is completed and submitted to an underwriter often before you find the home you want to purchase. The pre-approval that you will receive is an actual loan commitment from a lender—your guarantee of loan approval.
Ask your lender to explain the differences and to discuss limits and obligations under both the "pre-qualifying" and "pre-approval" process.
Step 5: Find a home that meets your needs
Consider these tips for successful house hunting:
- Keep an organized record of all your research. Write down comments about the homes that you see. Keep track of your likes and dislikes.
- Make sure your agent is aware of your time schedule and expectations when seeing properties.
- Tell your agent about any homes that pique your interest and those you'd like to know more about, including homes you discover online or in areas you explore yourself. Your agent can then make appointments to show those that appeal to you.
- Express your likes and dislikes to your agent after each showing. Honest communication is essential and helps the agent do a better job for you.
- Trust your agent and remain open to their ideas and suggestions. Their knowledge of the market and available properties will serve you well in the home finding process.
You can search the MLS and even set up email property updates here.
Step 6: Make an offer to buy a home
When you find the right property, your real estate agent will help write up the offer to present to the seller. Consider these important tips:
- Determine your purchase goals and objectives up front and prioritize those objectives by what is most important to you. Is it price, financing terms, making sure the closing occurs by a specific date? This will help your agent create a successful negotiating strategy.
- One of the biggest challenges is knowing what price to offer. Discuss with your agent information on market values of similar properties that have sold, so you can make a sound pricing decision.
- Along with pricing, there are a number of other and terms and contingencies to consider. The goal of your initial offer is to set the stage for a successful negotiation. Be prepared to give on small and less significant points in order to get what you really want. Keep a positive attitude about the process.
Step 7: Complete the home purchase
The home purchase is a step-by-step process that can take as many as 90 days or more to complete.
Your partnership with your agent is critical at this point in the transaction and good communication is essential to make sure everything progresses as smoothly as possible. Keep in touch with your agent during this stage of the sale. Complete all your tasks in a timely manner. Stay on top of the details, keeping everyone in the loop.
Most importantly, keep focused on the goal of moving and settling into your new home, and you will survive the home buying process with a smile on your face.
Thank you for allowing me to share my Seven Steps to Home Buying Success. Please contact me anytime you have questions about real estate or when you know of anyone interested in buying or selling.