Buying a home can be a daunting process for anyone that doesn’t have experience in operating the property ladder. With the fear of failing to be accepted for a mortgage or not being able to make repayments, or simply just being unsure about what’s needed in order to buy a house, it can be a confusing time for all involved. Thankfully, the home buying process can be broken down into four steps. From ensuring that you can afford the home, to putting in that final offer, here is our guide:
- Work Out What You Can Afford
First thing’s first, you need to be sure that you can afford to buy a house in the first place. While you could get bad credit loans in an emergency, you can’t rely on this solution regularly down the line to pay off mortgage repayments. For this reason, the crucial first step to buying a house is working out your budget.
Generally speaking, lenders tend to advise that you look for a house that costs no more than 3-5 times more than your overall household income. This guidance does come with other considerations, such as the down payment you are able to make, and any other debt you will be dealing with at the time. Only you will know your full financial situation, however, so it’s important to pay close attention to your income, outgoings and how stable your current financial situation really is.
- Get Pre-Approved For A Mortgage
Even after you’ve set a budget, there’s no guarantee that you’ll be accepted for the amount that you want, so it’s important to apply for and get pre-approval for the mortgage first. To receive a prequalification decision, you’ll only need to provide some financial information to your chosen bank or institution. In most cases, the lender will review this information and get back to you relatively quickly with a decision. This will give you a clearer idea of the money you have to spend.
- Find A House That Suits That Budget
Once you’ve worked out a realistic budget and received preapproval, you can start the fun part – looking for your future home. You’ll want to find a real estate agent that can help you with the legal and financial information, however, it’s important to make sure you’re doing your research before opting for any one agent. When buying a property, you should never have to pay additional fees, as they are compensated through the buyer of the home, so make sure you aren’t being charged anything more than for the home.
As you start to look, make sure you take notes on all of the homes you’re exploring and take additional photos where you can. Look around all the details you need, from electrics and whether windows open properly, to the pressure of the shower or what kind of amenities it has. The local area will also make a difference, so get familiar with things around you, including other homes, the amount of traffic, the parking availability and the facilities located nearby.
At this stage, you can also have a home inspector come through and work out these details for you, and the mortgage lender may also send an appraiser around to ensure you are getting a fair and just price for the property you’ve chosen.
- Put In An Offer You Are Comfortable With And Close
Found the perfect home and all checks are in order? It’s time to put in an offer! In most cases, there will be a bit of ‘wiggle room’ in price, but this can differ depending on the seller and the price the home is already selling at. Put in an offer, but remember that if they have other sellers offering more, you could lose the home to them instead. In some cases, you may even need to put in an offer that’s above the asking price depending on supply and demand.
Once you’re ready to place that offer, however, your real estate agent can do the legal work for you. They’ll put the offer up and, providing you are accepted, you’ll need to be prepared to put up a down payment and sign all relevant documentation including those relating to the property and the mortgage.
Your real estate agent will guide you through the steps along the way, ensuring that everything run’s smoothly but having a general idea of the process can help you stay on track when looking for your new home.
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