Buying a home is one of the biggest milestones in anyone’s lifetime. While it can be exciting, it can be overwhelming and confusing as well – but it doesn’t have to be. When you take the time to know more about the home buying process, you can take control and get rid of any financial fears you may have.
To help you prepare for buying a home, we give you some of the most important steps you’ll go through during the process.
Determining how much you can afford
Determining your budget is the first step to buying a home. As a general rule of thumb, you can start by looking at home prices that cost roughly around two to three times your yearly income. For mortgages, experts say payments should not surpass 28% of your gross monthly income. Once you’ve determined an ideal budget, the next step is to save up about 20% for the down payment, so you can avoid the need to buy private mortgage insurance.
Looking for the right type of mortgage, and get pre-approved
Once your budget is in order, it’s time for you to shop for a reputable mortgage lender. Often, buyers have plenty of questions, such as how long it will take, what guidelines are in place, etc., so be sure you choose a lender which can provide you with clear answers.
Creating a list of must-have features
Make an organized list of what features you absolutely must have, and other extras you simply would like to have. Must-have features should be the most important factors, such as number of bedrooms and bathrooms, proximity to schools or your workplace, and other things important to your lifestyle.
Extras are other things you can do without but would just like to have, such as a swimming pool, an outdoor area, and other features you can simply add later on.
Starting your search, and looking for an agent
This is where the fun starts! Make use of online resources and gauge how your budget and must-have features stack up compared to what’s available.
You should also consider hiring a real estate agent to help you during your search. A reliable agent will give you access to more options, and can help with setting up appointments. Home buying can be emotional for some, so having an agent can serve as a mediator between you and your potential seller.
Placing an offer
Once you’ve decided on a home that meets your budget, requirements and preferences, it’s time to make an offer.
At times, this part can get somewhat tricky – place too low an offer, and not only do you risk losing the home, but you may also be insulting the seller. On the other hand, you also do not want to overpay, so what exactly is the right strategy?
A good strategy is to look at similar homes in the area. IS the home you’re targeting priced reasonably compared with other homes? Did some of the homes sell for less than its asking price? If they sold close to what your seller is offering, then it’s a good indication that you should place an offer close to that amount.