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These home buying steps will get you moving forward.
These are “inside” tips: I am a real estate agent and I deal with home buying on a daily basis.
Rarely there is a day to go by that I am not involved with some of the many aspects of home buying: talking with investors, calling a bank on the behalf of a seller who needs to short sale his home, sending emails to potential buyers stationed overseas serving in our armed forces who might be interested buying a home in “my real estate territory” [which is Atlanta north], advising someone who has the money to buy a home for cash that it would be wiser to finance the purchase because he/she can take advantage of the mortgage interest deduction [MID] …even in a $1 million home!
As you can see I live and breath real estate and I now I would like to share some of these secrets “just” with you… LOL
Home buying step #1: Credit Check
I always start with the assumption that my buyers will finance their home.
Even if you are among those fortunate to have saved enough to buy it all outright I still counsel that you finance – proved that it will be your primary residence.
The reason is that you can take advantage of mortgage interest deduction (MID) -- it is a great tax saving that allows you to deduct from you income tax 100% of your mortgage interest paid on your primary residence for the life of the loan.
For now, let’s go back and concentrate in “credit check” part of the home buying steps: This is in fact something that you should be monitoring in a on going basis – but it becomes especially important when you decide to buy a house.
For more info, please click here – “Credit Check”
Home buying Step #2: Free Credit Report
Whenever you apply for a line of credit with a bank or a credit card or a gasoline card, the lender however they might be, they will “pull your credit report” from the credit bureaus.
The 03 major players are: Equifax®, Experian® and Transunion®.
Most creditors, including the major retail chains, will report regularly to the bureaus – and you’d better pay attention to it because any derogatory info – like a 30 days late payment stays there for quite a long time.
You also can and should request your credit report for free at least once a year from each of the bureaus according to the Fair Credit Act.
This is one of the easiest among all your home buying steps… If you know how to do it! For more info, please click here – “Free Reports”
Home buying step #3: Credit scores
Another import balancing act of your home-buying steps is to have a good number on your credit scores… It is related to your credit report but although many people treat them as the same, indeed they are two different things.
Credit scores are established by a rather secretive formula created Fair-Isaac Company that gives it the name of FICO® scores.
This is a more complete, and more complex look at your financial situation to encompass your income, whatever info is in credit report, lines of credit that you might have established as well as your “debt ratio” - which is the ratio between how much you “could borrow” and how much you effectively currently have used of your lines of credit.
In any case, please do not confuse credit record with credit scores.
To clarify the difference and learn much more about this might important item in your home buying steps please check out info I have in store for you on my page “Credit Scores”
Home Buying Step #4: Loan Application
To apply for a home-buying loan it will start similarly to other lines of credit you might have done.
You will talk with your bank or – the way I prefer – you will seek a loan officer who can shop with more than one source and can offer better rates and terms for you.
Your REALTOR® will be very instrumental in connecting you with goods sources of house loan.
However, you soon will see, it will be viewed with much more scrutiny because of the value of the loan and the time involved for it to be repaid.
I also caution whoever applies on line – although an abundance of legit credit sources are found in the Internet, there is also a dangerous high number of scammers as well.
For more info, please click here – “Loan Application“
Home Buying Step #5: Buying Power
Upon applying for a home loan, the next of your home buying steps is just a consequential one: Your bank or loan officer will take a good look at your finances and establish your “buying power.”
The loan officer will tell how much credit they can get you at this point in time.
Again this will be based on whatever is found in your credit record and reflected in your FICO® scores.
With that on hand you will know the price range of homes you can look.
It is important to notice that lenders will not go above and beyond the maximum they pre-approve you for.
So your options are: stay within your approved limit, negotiate the price down and/or save a good chunk of dough for your money down payment which buy the way is our next step in tour of the home buying steps.
For more info, please click here – “Buying Power“
Home buying step #6: Down Payment
Nowadays you almost cannot by a home without putting a percentage of your purchase price as a down payment.
Perhaps the only exception will be if you are buying with a VA loan.
Other than that, please be prepared to bring some money to the closing table.
How much money you will need to put down will depend several circumstances:
Home buying step #7: Grants
One of the “best kept secrets” in home buying steps is that many areas will offer home buying grants.
The reasons grants are offered will vary, as well as, the amount and conditions for you to get them.
Many agents do not like bringing grants to the mix because there is a lot of extra amount of work involved and we do not get a commission on that part of the sale.
But the bottom line is that they exist – you will need to do some work as well, however it is well worth to get informed and do the necessary leg work.
Home buying step #8: Home Type
At certain point you will need to answer the question of which type of home will suite your needs:
Detached house, condo or town home: Which one will be?
It is not a simple answer – each presents pros and cons, each will have unique savings and expenses.
There are concerns of safety versus privacy: A detached house gives most privacy but in a condo you may have a bit more “community” protection especially when you are traveling is harder for crooks to spot an absent home owner.
There is no free lunch – you pay for maintenance in a way or another. In a house you need to maintain your yard [or the neighbors will complain], shovel the snow, rake the leaves, change your roof when it goes bad…
In condominium the HOA will do all of those.
Price wise, my humble estimate is that they come about even
Home buying step #9: Location
Does not matter where you live, I am quite sure that you must have this expression dozens of times: “Location. Location. Location.”
Well, real estate price is always a direct correlation to location.
You can get the same builder, same material and the exact floor plan and two different locations I can guarantee you the price will not be the same.
So, choose wisely when setting your eyes in a home – Location can set prices worlds apart.
Home buying step #10: Realtor Hiring
I saved the best for last – your REALTOR® hiring.
Just in this section I have highlighted nine different home-buying steps to acquire your home.
Do you that there are the upwards of 180 steps from beginning to closing on a home purchase? Yes, there are. The National Association of REALTORS® has identified that many.
I do not know if I will have the energy to discus them all throughout this site… It is almost an endless subject…
I have discussed many other aspects elsewhere and there is more coming on the subject, for now let me point this simple thing:
As a rule, REALTORS® work on commission – paid by the seller – why would you forego such a valuable professional assistance that will not cost you a penny?
Your agent will do the heavy lifting on the entire home buying steps I have pointed here – if you already have an agent, congratulations!
If not, get some referrals, do some researching and have this valuable asset right on your side!
If you still did not have a real estate agent to represent you, please click here to visit my page "Realtor Hire" and learn the benefits of having one.Still Need Help Finding What You Are Looking For?
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JC Fagundes, Associate Broker
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