October 1, 2014

10 Step Guide to Buying Your Home



If you follow my social media pages (Facebook & Twitter), then you may have seen me tweet about the ten steps to buying your home from Realtor.com. Below you can find each step that you will need when purchasing your first home.

You can bookmark this page and research each step as you make your transition through the housing process.

Step 1: Are You Ready to Buy a Home
It is best to do a mental and financial check to make sure that you are indeed truly ready to be a homeowner.

Step 2: Hire A Realtor
It is always best to hire someone who has your best interest put forth. A buyer's agent will help you through the process. When I work with buyers, I make sure they understand how the process works, deliver them all options, and make them extra confident about purchasing their first home. You should always have someone to represent you in the home buying process even if you decide to build your home.

Step 3: Get A Mortgage Pre-Approval
Before any Realtor takes you to view homes, they will want to know that you are pre-approved. Without having a pre-approval you are basically dreaming on a wish. It is best to know what you can afford based on your finances. I would suggest you go a step forward and see how much you can afford based on your net income.

Ex: Gross Monthly Income - $3000
      Net Income (Take Home Pay) - $2,550
     
      Gross Annual Income - $36,000
      Net Annual Income - $30,600
      Home Price You Should Buy - $92,000

The lender will only take in account to the debt being reported on your credit report. If it isn't reported on your credit report (electricity, cell phone, gas, car maintenance and insurance, etc), then it won't be calculated in what your monthly bills. Take that into play when purchasing your home. A rule of thumb is that your mortgage shouldn't be more than 30% of your income. Based on this scenario, that range would be between $765- $900.

Step 4: Look at Homes
Now that the financial piece has been squared away, you are ready to search for homes that meet your price range.

Step 5: Choose Your Home
Base your home search on 3-5 things that you must have. Please take into consideration that if you are looking for an open concept, that can easily be adjusted if the wall can be knocked out. Don't let small cosmetic things like ugly carpet, wallpaper, or paint colors stop you from purchasing a home. Cosmetic things can be changed in as little time as a weekend and sweat equity.

Step 6: Make An Offer
This is why you hired a Realtor. Your Realtor will help you determine the price to set your offer at and what conditions to ask for.

Step 7: Stay Mortgage Approved
Once you have decided on your home to buy and your offer has been accepted, it is time to do due diligence. Just because you have a pre-approval, DOES NOT mean you have been approved on a home loan. The pre-approval is just to say that a lender has checked your information and you can purchase a home in the select price range. In order to stay mortgage approved, you have to keep your debt to income ratio in the same position as you did when getting pre-approved. During this time of the process, don't go buy a new car, new appliances, new furniture, or default on a credit card (yes this list can go on because this has happened before). Wait to buy these items when you have signed the closing documents and have the keys to the home in your hand.

Step 8: Protect Yourself...Get Insurance
Just as you need car insurance as a requirement to own and operate a car, you will need homeowner's insurance to own your home too. This is no getting out of this one. I would suggest you start with your insurance carrier that you have car insurance with or even renter's insurance. Some insurance companies offer discounts when you setup a bundle with them. (TIP: If you are apart of any organizations, see if your insurance company offers discounts with them. I was able to use my sorority to get a discount with my insurance company).

Step 9: You've Made It to Closing Day
You have finally made it to the closing day. You have exhausted yourself to find the perfect home and now it is almost time to achieve that reality.

Step 10: I'm A Homeowner
You are officially a part of the homeowner club. You have to make sure that you maintain your home. If you see a neighbor whose yard is decreasing your home value, be neighborly and charge a fee to keep it cut for them. See I've helped you create a small hustle in the neighborhood. You can also volunteer to do it as well.

These ten steps will help you prepare for purchasing your first home. If you or someone you know is ready to get the train rolling on purchasing your home, contact me today.

Andrea Fowler Web Developer