Preapproval
It can be tempting to jump into hunting for the perfect house, particularly if this is your first time. It’s a really good idea to get preapproved before you begin comparing properties. If you’ve heard of a prequalification, it’s important to know how it differs from preapproval.
Prequalification letter: A prequalification is an estimate of the amount of home loan you can get. It’s based on an informal evaluation of your income and other information. Preapproval letter: A mortgage preapproval is a document from a lender that tells you exactly how much loan money you can get. It’s based on your financial information, such as W-2s, bank statements and your credit score.
Benefits Of Preapproval
You know exactly what you can afford: You and your agent know what you can afford once you have a preapproval letter in hand. This will help you shop within your budget.
You can make a stronger offer: Sellers need to know that the buyer they choose can afford their home. A preapproval shows a seller that you have the money needed to purchase the home.
If you qualify as a first-time home buyer, you can benefit from a number of assistance programs and your loan office can discuss options with you that may help you with purchasing a home.
Understand Your Loan Options
There are multiple types of mortgage loans… conventional, FHA, USDA and VA, so talk with your lender about what loan is best for you.
Closing Cost AND OTHER COSTS ASSOCIATED WITH BUYING A HOME
Closing costs are expenses that go to your lender in exchange for arranging certain loan services. Some common closing costs you might see include: pest inspection fees, appraisal fees, title insurance expenses, escrow fees and attorney’s fees. Your lender can go over the fees associated with your purchase and loan.
As a first-time buyer, you may qualify for government-backed grants or loans that assist with closing costs. Additionally, it’s not uncommon to ask the seller to help cover closing costs.
List Your Needs, Your Non-Negotiables And Nice-To-Haves
Once you’ve decided on your needs, non-negotiables and things that you feel you don’t want to live without, you can begin to prioritize which features you want in your home based on your needs. For example, you might focus on finding a home with extra bedrooms, a big bonus room, home office or fenced yard. These are items you want to consider and speak to your real estate agent about so they can compare properties and find what you are looking for.
WorkING With A Real Estate Agent
Work with a real estate agent to find the perfect property that best meets your needs. Agents are local professionals who are experts in the home buying process and your local market.
A real estate agent can help by:
Showing you properties in your area that fit your needs and budget
Attend showings with you to learn more about your priorities as a homeowner
Helping you decide how much to offer for a property
Submitting an offer letter on your behalf
Helping you negotiate with the seller or the seller’s agent after you submit an offer
Attending the closing with you to make sure that everything is in order with your sale
Remember, only a buyer’s agent will work on your behalf. Don’t rely on the seller’s agent to represent your best interests. Always choose a qualified REALTOR® or real estate agent to help you buy a home.
SubmitTING An Offer AND EARNEST MONEY DEPOSIT
You should never submit an offer on a home unless you’re 100% committed to the purchase – or you could risk losing your earnest money deposit, also known as a “good faith deposit.” Giving this money signals to the owner that you’re serious about the offer.
HOME InspectIONS
You will need to hire a professional home inspector before you purchase a home. During an inspection, the inspector tells you about specific problems with the home. You can use the results of your inspection to learn more about your home and request concessions from your seller.
APPRAISAL
At some point during the process, your lender will order an appraisal be done on the home you wish to purchase. Your appraiser only gives you and your lender a rough idea of how much your home is worth based on comparable properties (comps).
Stick To Your Budget
Many first-time home buyers get too invested in a home only to find out they can’t get the loan for it or there are some major issues. Don’t go over your budget for a home, even if it seems perfect for you, and be sure you budget in enough money for repairs or renovations. The right home is out there for you, so keep searching until you find a home that fits your budget and your list of must-haves.