Finding the right home for you may be a long and stressful process. Though it may be stressful, that is the fun part. Once you have found the right home for you, the boring and even more stressful part begins.
The first thing must make sure of is being pre-approved. This should be done before even looking for a home. Your mortgage lender will look at things like your credit and other information to decide how much money the mortgage lender will loan you. This is very important because it will set your price range will you search for the right home.
After finding the right home, you and your real estate agent will need to make an offer. Sellers tend to set their price slightly above the actual value in preparation for the negotiations. A good offer would be about 5% below the asking process. When negotiating, it is best to try and meet somewhere in the middle to avoid long back and forth. You will have to make an earnest money deposit once you and the seller have agreed upon a price. This money goes into escrow and shows the seller that you intend on buying the home.
Your next step will be to pick the right type of mortgage program for you. If you don’t plan on spending a long time in the home you are purchasing, an adjustable rate mortgage (ARM) is a good option. This offers a fixed mortgage rate for somewhere between 1 and 7 years; the rate may increase or decrease every year after this. If you plan on staying in your home for a long time and prefer a set monthly payment, a fixed-rate mortgage is a good option. These offer fixed interest rates for a long period of time. The time periods tend to be 15 or 30 years. You can also choose an interest-only payment. This means that you can pay just enough to cover the interest part of the payment for a period of time. This allows you to avoid paying principal whenever you are tight on money. You should get as much information from your mortgage lender or banker before deciding on what mortgage is best for you.
Your next step would be to have the house inspected. You want to make sure that the home is in good condition before closing on it. The home inspection can also be used to help the negotiation of the final price. You may be able to use it to get a price reduction or to get the seller to pay for any repairs needed.
Next, you will need to have your home appraised. You will also want to acquire quotes on homeowner’s insurance. It is important to know what type of insurance you will be needing to purchase. This depends on the area and region that you will be living in. It is good for us, here in southern California, to purchase things like fire and earthquake insurance, while someone in the Midwest may need tornado insurance instead.
Once all of this is settled, you will need to close. You may need to wait until a date that is convenient to both parties is able to be set. You should ask your banker for information on all the closing costs to be as prepared as possible. It’s best to avoid surprises. Once these costs are paid the mortgage is set, and the deal is closed, you can move in!