Buying a house is a big step no matter when you decide to take it — but the market frequently changes, especially in areas with a high demand for homes. If purchasing your first home or moving into a new space is on your “to-do” list for this year, how should you go about the process? There are many steps to consider, not the least of which is finding a home you like. Even before that, there are serious financial considerations at play. To get started on the road to a new home, consider this quick step-by-step guide for learning the basics of buying a house in 2020.
Set Clear Goals for Your Buying Process
It’s tough to select the right home for purchase if you aren’t sure what you want from the process. Are you looking for a home that you can grow into with a family, or do you need a place to stay for a few years while your career develops? Do you want a “starter home” or a property that enables you to build up equity over time? Before embarking on any concrete steps for spending your money on a home, be sure to take the time to understand your own goals. These considerations will inform many of your actions in the future.
Develop an Understanding of Your Budget
How much can you afford to spend on a home? Remember that above and beyond the price of the house, you will also have associated costs to pay for at closing. You may encounter other incidental expenses, such as the cost of a home inspection, when pursuing the property you want. Take those facts into consideration alongside harder numbers, such as how much a lender will offer you. Generally, it is advisable to aim for a home that comes in below your maximum loan amount. This contingency provides room for negotiation while also potentially saving you money when you identify a good deal.
Check Your Savings: Can You Afford a Down Payment?
Remember that a 10% down payment isn’t enough these days — most lenders insist on at least 20% down if you don’t want to tack on expensive mortgage insurance to your monthly payment. This cost is a vital element to consider alongside your maximum loan amount. Even though you may win approval for a larger loan, it won’t mean much if you can’t come up with the cash for an equally sizeable down payment. Use this information to plan for growing your savings.
Getting Pre-Qualified is Your First Big Step
Before you begin looking for a home, you should seek out a pre-qualification application. These steps will provide you with more information about how much you can afford when shopping for a home. Pre-qualification also shows buyers that you’re serious and ready to move forward when you make an offer. Pre-qualification requires sharing some financial details and going over your application with the bank. At Resource One Credit Union, we have a quick and easy process for applications, and our attentive staff provide helpful mortgage tips as you explore your options.
The Fun Part Begins: Shop for Your Dream Home
Whether you choose to work alongside a professional real estate agent or not, your next step will involve looking at many homes. This process is all about what you want — no one can advise you on what you’d like in a house except yourself. Keep in mind that a realtor may be able to offer you access to homes before they officially hit the market, while also providing a useful buffer for negotiations.
Pursue Your Choice with a Strong Offer
Did you find the property that speaks to you? When you’re confident you’ve found “the one,” it’s time to make an offer. At this stage, having your pre-qualification documentation is a must. Go into the buying process with a strong offer whenever possible to shut out competition and increase your chance of locking in your choice. However, always keep in mind that you should adjust your offer based on the condition of the home and what you need to change to make it suitable.
Do Your Due Diligence on the Home
A home inspection is a necessary procedure to order when you place a home under contract for sale. At this stage, the seller conditionally accepts your offer, and you sign a contract to that effect. A home inspection alerts you to any serious problems with the home so you can factor them into your negotiations. This stage is where you push for and pursue credits from the seller to improve your position or reduce the amount of money you spend.
Secure Final Approval and Close on Your New Home
All that’s left now is to wait for the bank or credit union of your choice to finish processing your paperwork for approval of the loan. This approval may take several weeks, so plan accordingly. At Resource One Credit Union, we work quickly to speed our clients towards the closing table. Before you know it, you’ll be the proud owner of a home that’s truly yours.
Find the Help You Need to Buy a Home This Year with Resource One
At Resource One Credit Union, we’re always excited for the opportunity to aid our members in purchasing a home to love for years to come. With flexible mortgage solutions, competitive rates, and “top shelf” customer service, we’re here to support you from pre-qualification to the closing table.
Think you’re ready to take the next steps or want to speak to a financial adviser to help with your plans for the future? Visit one of our convenient branch locations today, learn about our mortgage solutions online, or contact us directly for more help from our friendly staff today.