Finances & Money

What You Need to Know About Buying a House

You probably know that when you want to buy a house, you will put quite a bit of time and effort in. Knowing everything you need to know before you get started can really help to take some of the stress out of it.

Put in the Research

As soon as you decide that you want to begin this journey, you should begin looking at websites, magazines, and newspapers that have listings for real estate. Take note of those that truly interest you and watch to determine how long they are on the market. You might also pay attention to any changes that might occur with regards to the asking price. This is one way that you can get an idea about the trends with housing in the areas you are researching. Take note of things like prices of homes in regular neighborhoods and those in gated communities too. Sometimes you might be surprised at the affordability of some of the ones behind gates. In other words, don’t just assume you can’t afford a home just because it is behind a gate.

Also, while you are looking, make sure your credit score is where it should be, and if it isn’t, get it there.

What Can You Afford?

There is a rule of thumb that says that people should generally tend to look for homes that have a price range between 3 and 5 times that of their household annual income. That is, if they plan to have a down payment of 20% and don’t have too much other debt. However, this is also a determination that needs to be based on your own personal financial situation. If you’re looking at San Francisco real estate then hopefully you have a great job that pays well, considering the median home price there is currently $1,388,000.

You can talk to a good mortgage company for more information on this aspect of things.

Get Preapproved for a Loan

A crucial step when it comes to buying a home is to know what you can afford. The best way for someone to do that is to get preapproved for a mortgage loan. To do this, you need to first get prequalified. All you need to do is provide your chosen mortgage banker with your financial information. This should include things like your investments and savings along with your income. The lender will go through this information and let you know how much money they can lend you. You will then have your price range for a house.

After that, you need to get preapproved for the actual credit. To do this, you will need things like bank account statements, paycheck stubs, and W-2 forms so that the lender can verify your credit and financial status.

Shopping for a Home and Making an Offer

This is the point where you find a real estate agent and begin touring homes that fall within your price range. You might be looking at quite a few houses, so it might be helpful to carry around a notebook that you can use to take notes on the various houses. You might also want to take pictures or even videos of the houses you like.

Be sure to look for things like how well maintained the neighboring houses are, the traffic on that street, is there ample parking, whether it is conveniently located to things like your job, public transportation, shopping, etc.

You can take as long as you need to find a home – this isn’t something that should be rushed into. When you find the ideal home, work with the real estate agent when it comes to negotiating an offer that will be based on the value of homes in the neighborhood that are comparable. When the seller and you come to an agreement in regard to the price, it will then go into escrow. Escrow is essentially a period of time that it will take in order to get through the rest of the steps to buying a home.

These steps include getting a home inspection, working with the mortgage company to choose your loan, getting the home appraised, coordinating and completing all of the paperwork, and closing the sale.

Once you have done all of that, you can move into your new home and celebrate being a new homeowner!

 

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About the author

Susan Paige

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