By Sterling Xie. Edited by Swastik Patel
Overview
While buying property is often one of the most stressful parts of your life, there are a few steps that you can take to simplify the process. In this article, you will learn the various steps to take when purchasing property.
Preliminary Steps
The first step is checking your own credit report, a report of your credibility or trustworthiness with transactions, before you allow a lender to check your credit score. The three major credit reporting agencies—TransUnion, Equifax, and Experian—provide one free credit report every year. Ensure that you use your FICO Score rather than your Vantage Score as it will be what the lender uses.
The next step is getting pre-approved. To determine your budget for house shopping, perhaps the most important part is figuring out how much the loaner is willing to loan to you. Gather your income statements, W2s, tax returns, assets records, debt records, bankruptcy records, and other relevant financial documents. Banks and loaning companies will evaluate your debt-to-income ratio, your credit, and other important measures before giving you an estimate of how much they are willing to let you borrow. Finally, they will give you a letter of pre-approval, which will make your house-purchasing experience much easier. It shows the seller that you are truly serious about purchasing property.
Starting the Home Search
The third step is making a list of preferred features of your house (schools nearby, type of home, layouts, etc.). Then, optionally, find a real estate agent that can provide insight on the market (i.e. when it’s the best time to buy), negotiating, offer prices, unique conditions locally, and much more. Next, start touring houses to get a better idea of their value.
The Offer
It’s finally time to make an offer! You should make an offer based on the Comparative Market Analysis (CMA) to ensure fairness. Ask for disclosure documents (of natural disasters and other events that have occurred in the house). Also, make sure you put in a good earnest money deposit to once again show you’re serious about buying the home. Finally, ensure that you fulfill your contingencies, the agreement between you and the seller and the one between you and the lender. The lender uses this to ensure they are not overpaying on the loan.
After Signing the Contract
Schedule an inspection to better know the inner workings of the house. After you’re satisfied and confirmed with a professional or real estate agent, you’re ready to close the deal and move! The last step is purchasing homeowners insurance to protect you financially in case of any damage.
Conclusion
You’re all set! Hopefully, this article made home buying just a little simpler. Good luck on your home-buying adventures.
