Have Your Credit Pre-Approved
Getting a credit pre-approval means you receive a loan qualification from your mortgage company before you have found a home, based on a review of your credit and finances. A credit pre-approval shows sellers that you're a qualified buyer and helps you establish a clear price range.
There are many good reasons for getting a credit pre-approval before you buy a home:
- It makes your home search more efficient by allowing you to focus only on homes you know you can afford.
- It lets sellers know that you can back up your offer, so they don't have to worry about whether you can get a loan.
- It lets you know early in the process if you will have difficulty getting pre-approved, so you have a chance to address problems before finding a home.
- It gets much of the mortgage process out of the way up front, so you can complete your transaction quickly after you find a home.
Go House Hunting
Now that you've had your credit pre-approved and know how much you can afford, it's time to go house-hunting. You may look at one house or two dozen before you find the one that's right for you. Just keep an open mind, and focus on the things that are really important to you, and you're sure to find a place where you'll feel at home.
Choosing a neighborhood
Finding the right home for you and your family has as much to do with the neighborhood as with the home itself. Beyond price, what you look for in a neighborhood probably has a lot to do with your personal situation. How far are you willing to commute to work? How close to you want to be to family and friends. Do you have young children who would enjoy a nearby playground? Picturing your day-to-day life in a certain neighborhood is a good way to predict whether you will feel comfortable there.
Considering different house styles
You may want to look beyond the traditional detached single-family home. Condominiums, town houses, and duplexes can be more affordable options, especially if you're looking in a densely populated area. These types of housing may not offer as much yard space or privacy as single-family homes, but those may not be as important to you as the chance to own a home in the neighborhood of your choice.
Building a new home
If you've looked and looked for your dream home without success, or if you want to be the very first owner of a brand new home, consider building. You'll have more opportunity to customize the home's features and design, more up-to-date appliances and building materials, and usually a builder's warranty to cover problems that come up in the first year.
Make an Offer
So, you've found a house you want to buy. Congratulations! Now you need to decide how much you're willing to pay to make it yours.
Your real estate agent should be able to give you a list of similar homes nearby that have sold recently, and for how much. Although you can't directly compare the home you want with the homes on the list without ever having been in them, you can use the list of comparable sales to get a general idea of the neighborhood's price range.
In addition to sale prices for other homes, there are several ways you can determine a good amount to offer:
- The condition of the house. Is the home in move-in condition, in need of paint and other cosmetic improvements, or a fixer-upper that needs some real work?
- The market. If you are in a buyer's market-where there are more homes for sale than there are people to buy them-prices are probably stable or falling. If you are in a seller's market-where there are more buyers looking for homes than there are homes for sale-prices are probably moving upward.
- Your threshold. If you've gotten a credit pre-approval, you know how much you can borrow for your home purchase. Of course, you may not be comfortable paying as much as you've been approved to borrow, so think carefully about your financial situation before making an offer.
Get a Home Inspection
When you are making what is likely the largest investment of your life, you should know as much as possible about what you are buying. That's why it's a good idea to have a home inspected before you make your purchase.
At a minimum, the inspector should examine the following:
- Exterior structural components, including the foundation, roof, siding, and chimney.
- Interior structural components, including the basement or crawlspace, attic, flooring, and ceilings.
- Major systems, including heating, cooling, plumbing, and electrical.
You should make every effort to be present during the inspection so that you will have an opportunity to ask questions and see first-hand what the inspector looks at. You should receive an inspection report with descriptions, and possibly photographs, of any problems with the home.
Close the Deal
You've found your home, agreed on a price with the seller, had the home inspected, and now you're ready for the closing, where you will officially take ownership of the property. Welcome to the end of the home buying process-and the beginning of your homeownership journey.
When to schedule your closing
The closing date will depend on when the seller is ready to move out, when you are ready to move in, and when all of the mortgage details have been finalized. You may want to request a closing date near the end of the month in order to minimize the amount of interest you have to prepay on your mortgage.
What happens at closing
Despite all the new technologies that are streamlining the mortgage process, the closing phase remains very paper-intensive. You will have to review and sign a hefty stack of documents, some of them in duplicate and triplicate. You will also have to pay for any closing costs, including:
- Lender fees, such as origination points and discount points
- Third-party fees for services not provided by your lender, which may include a settlement fee, title insurance, appraisal fee, credit report fee, and attorney's fees
- Prepaid items that must be paid to your lender in advance, such as prepaid interest, hazard insurance, and deposits to set up an escrow account
Copy and Referenced from GMAC: https://www.gmacmortgage.com/Purchase/process.html
