Buying a home can be an exciting time, but done incorrectly can be a daunting, overwhelming, and frustrating experience. However, the following “8 Steps to the Home Buying Process” can bring clarity, organization, and enthusiasm to the procedure. From preparation to closing, these 8 steps can help you become part of the American dream of homeownership.
8 Steps to the Home Buying Process includes: preparation of a home budget, decide how much you want to invest in a home, start early saving for a down payment, paying down of debt, improvement of your credit score, selection of a mortgage broker, selection of a real estate broker, and preparation for incidental expenses. Let us break these down and clarify their importance.
1. Preparing a home budget:
Start early itemizing your home expenses including food, rent, groceries, daily incidentals, emergency fund, health insurance, travel expenses, entertainment, and wardrobe. Decide between wants and needs to minimize expenses and maximize income.
2. Decide how much you want to invest in buying a home:
What a prospective home buyer is qualified for and what they are comfortable investing are not always the same. This is a good reason to prepare your budget first, you want to have time and resources to enjoy your new home, not working day-to-day just to maintain it.
3. Start saving early for the down payment:
Depending on what type of loan you qualify for will determine the amount of down payment you will need. Cut back on unnecessary expenses and luxuries to invest in a sizable down payment.
4. Start paying down your debt:
You want to have a good income-to-debt ratio when applying for financing. In addition to paying down debt, start paying off debt such as small credit card balances, student loans, medical expenses. It is also advised not to acquire additional credit cards until after closing.
5. Improvement of your credit score:
The paying down of debt and improving your credit score go hand-in-hand. Know your credit score and start eliminating negatives. This should be done before consulting with a mortgage broker.
6. Selection of a mortgage broker:
This is where your pro-active preparation pays off. Interview mortgage brokers and determine who is going to give you the best rate. We recommend you start with financing institutions you have established a business relationship with first, such as your bank or credit union. Choose a lender that offers a diversity of loan programs to counsel you on the loan program that is in your long-term best interest. Lock in your interest rate early. The following link explains the 5 steps of what to expect through the loan process from application to funding:
7. Selection of a real estate broker:
Is an important decision for you to make. Your Realtor needs to be more than a “concierge”. Driving around looking at houses and writing an offer is not a true real estate professional. Home buyers should Interview Realtors and choose one that is going to advise and counsel them from beginning through closing and beyond. The real estate profession has changed through the years, from full-service to menu-service to discount services. It is important to consider many factors when choosing a Realtor to assist you in the home search. Three top factors to consider when choosing a Realtor are:
Their understanding of current market activity to ensure you do not pay too much.
Their negotiation skills, and the ability to bring all parties together, and get you the best purchase price.
Their commitment to council you through the entire process including, but not limited to the home inspection, appraisal, and closing costs.
8. Preparation for incidental expenses:
Such as homeowner’s insurance, home warranty, home inspection, utility connections and homeowner’s association (if applicable) are important to be aware of, and prepare for.
Remember the 3 P’s of Purchasing a home
Planning: Plan your course of action well in advance.
Preparation: Work your plan of action and prepare for the expected and especially the unexpected.
Prevention: Do not take shortcuts or rush through the process. Proceed in a methodical manner through the 8 steps to home buying, and do not “put the cart before the horse”, costing you more in the long run.
Buying a home is likely to be one of the biggest investments you will make over your lifetime. While it is a big step, and may seem scary, it is also an exciting and rewarding time. Homeownership builds financial security, independence, and happiness. Make sure you have a knowledgeable and experienced real estate agent on your side. They will guide you through this process and make what can be a very daunting process, as easy as possible. Welcome home! If you have any other questions feel free to reach out to First Coast Realty on Facebook or Twitter and we would be happy to speak with you about what works for you. Or, to talk to an agent call/text today 904-494-8408 or email info@firstcoastrealtyinc.com
About the Authors: The above article "8 Steps to the Home Buying Process" was provided by First Coast Realty Inc. The agents at First Coast Realty have years of experience and have been successful in the St. Augustine and Northeast Florida area for over 25 years. If you are considering buying a home give us a call first to see if you can leverage our knowledge to your advantage. We service St Augustine, Palm Coast, Palatka, and Jacksonville areas.