10 POINT CHECKLIST WHEN BUYING A HOME
- Check your own credit and strengthen if it is necessary.
- Decide on a reasonable budget you can spend.
- Research mortgage options.
Types of Mortgage:
FHA Loans (Federal Housing Administration): Most widely known for low down payment mortgage programs. These loans are secured. Therefore, the credit score can be low.
Conventional Loans: These loans require as little as 3% down and are offered through banks and other mortgage lenders.
VA Loans: These can be done with a zero-down payment, but only active duty and retired military can qualify.
USDA Loans: These are to help low to middle income homebuyers in areas that are considered “rural.” These loans can also be made with no down payment.
- Decide where your down payment and closing costs are coming from.
This can be done once you decide what mortgage type will work best in your situation. Also, keep in mind that closing costs can range from 1-3% of the home’s price.
- Gather all documentation that are required from the mortgage lender
When applying for a mortgage you will be required to provide documents to the lender. The documents that will be needed are as follows:
Income verification/ employment: You will have to provide two year’s tax returns, W-2s, 1099s and your last few months of paystubs.
Credit/ID: You will have to provide your driver’s license, social security card and any acceptable alternatives.
Financial Condition: Bank statements which include retirement accounts, proof of funds, a gift letter (if down payment is coming from a gift)
- Get a preapproved letter
This is essentially applying for a home. The only difference is there is not a specific house that is being applied for. The lender would check your credit, verify your income and employment status. A preapproval letter is a commitment from the lender that they will be providing you with a loan.
- Hire a real estate agent
There are many reasons why you should hire a real estate agent. A real estate agent will do all the research that is necessary to find you your dream home. They will complete all necessary contracts as well as all necessary tasks during the homebuying process. They can also help with fixing your credit as well as find a mortgage lender that is right for your situation. All agents have knowledge of the housing market and they will guide you through step by step all the way to the closing table.
- Look at homes
Once you have narrowed down the area you would like to be, the next step is deciding what you want in your new home and discussing this with the real estate agent that you have hired.
- Making an offer
The most important thing when making an offer is coming across as a serious buyer, but still trying to get the best deal at the same time. However, your hired agent will help you with doing this step.
- Get an inspection of the home you are making an offer on and wait for closing day!
The seller of the house will accept your offer and from there you have 3 to 5 days to set up an inspection. To get an inspection, you can hire a professional to do an inspection of the property, but you are not obligated to do so.