Home buying involves numerous steps, from finding an ideal property within your budget and needs, securing financing, making an offer, receiving a home inspection report and finally finalizing your purchase. Don’t forget the associated expenses like property taxes, homeowner’s insurance premiums and moving costs as part of this journey!
Be mindful not to allow your mortgage payment to consume more than 25% of your take-home pay.
Finding a Home
An investment property is an enormous commitment, so it’s crucial that it fits both your lifestyle and budget. Start by assessing your readiness to become a homeowner before setting a budget and getting preapproved by lenders for mortgage financing. Once this process has been completed, find an agent to guide the process of searching and purchasing homes for sale.
While you can search for homes for sale on your own, having professional help can save time and money in costly mistakes. Once you find one you love, submit an offer then wait to hear back from the seller; should they accept, a home inspection is scheduled and your closing is scheduled shortly afterwards.
Neighborhoods should also be taken into consideration when searching for the perfect home. Consider things such as proximity to schools and parks; public transit route availability; home improvement potential of your preferred neighborhood.
Once you have narrowed down your home search to several neighborhoods, take the time to visit each in person. Walk around looking for “for sale” signs and speak with residents; also seek recommendations from friends and family; check community websites as well as online tools such as StreetEasy to gain information such as current prices, listing history, days on market etc.
Once you’ve narrowed down your top choice home, rank its features from most to least important and show this list to your agent so they can show you properties that meet them. Keep in mind that not everything on your wish list may be possible so prioritize what matters to you most.
Making an Offer
As soon as you find the home of your dreams, it is time to make an offer. An offer signals your intent to purchase the property and is binding between both parties involved. Before making your offer, many considerations should be taken into account. A real estate agent can help provide insight into local market trends as well as what similar homes in your area have sold for.
As part of your offer, it is crucial that all pertinent terms and conditions of the sale be included. These usually include purchase price, earnest money deposit (which goes toward down payment upon signing), mortgage preapproval from lender as well as closing date.
As part of your purchase agreement, make any special requests you have of the seller, such as whether or not they allow pets, leaving behind certain furniture or appliances for you when moving, etc. Additionally, include any contingencies in case loan approval fails or home inspection uncovers structural or property problems which entitle you to terminate within a specified timeframe or risk losing your earnest money deposit.
If there’s competition for a home, you may need to submit an offer higher than its asking price to stand out from other potential buyers. Knowing your budget and local housing market will help determine how much to offer; generally it is recommended not exceeding the maximum monthly amount that can be afforded including mortgage payments and costs. It is also beneficial if you save up extra cash to provide a larger down payment and set yourself apart from other buyers while showing the seller you are serious about buying it; having cash reserves available also shows them you have enough available cash should the home doesn’t appraise for what was initially being offered so it shows them that cash is available should any discrepancies can occur in appraisal differences if this home doesn’t appraise for what was offered – showing them you have sufficient reserves available should this occur allowing them to cover any discrepancies between appraised value difference differences (reflecting on value appreciation of course!).
Professional home inspection is an invaluable investment when purchasing your new home. An inspector provides an impartial assessment of its components such as roof, structural integrity, plumbing and electrical systems as well as heating/cooling system components such as major appliances, interior finishes and attic space. They may identify areas which need attention or require repair in their report that can help negotiate with sellers more effectively.
Idealy, inspections should occur prior to making an offer on a home; this allows buyers to renegotiate or withdraw if serious issues are discovered during inspections. Unfortunately due to time or other constraints, professional inspections may sometimes occur after offers have been accepted by sellers.
As much as it may not be required, being present during an inspection can often be beneficial. Being there allows you to hear what comments the inspector is making while also giving you the chance to pose quick-fire queries during their visit.
Home inspections can also provide invaluable advice regarding what a prospective home buyer should look out for and why. A home can be an expensive investment, and therefore it is wise to understand exactly what is being purchased so as to make sure your decision is safe and smart.
An inspection also helps you gain knowledge on what improvements can be made to make the property safer and more livable. For instance, if there is a rotting foundation or sagging structure present on your home, an inspector can tell you whether the issue is severe enough and would be easy enough to fix.
An inspection is especially essential if you plan to purchase your new home with a government-insured loan, since federal mortgage guidelines set minimum standards and an inspection can help ensure it satisfies these. Furthermore, repairs will need to be made prior to funding your loan; an inspection can help make sure any necessary fixes have been addressed as quickly as possible.
Home inspections can help you establish how much to offer for the property. Sellers often allow for negotiation based on inspection results; you should discuss this matter with your realtor. A serious defect, such as an unstable foundation or wood-destroying organism infestation, could necessitate making a lower offer than planned for.
Once all conditions have been removed from your purchase contract and financing secured, it’s time for closing day – an essential milestone typically overseen by an escrow agent or title company. At closing, an escrow agent will verify that both parties have fulfilled all terms of their agreement before concluding the transfer of ownership and recording the deed. Therefore, it’s crucial that both parties come prepared for this final step of the process. At closing, it is essential that you bring government-issued identification, along with enough cash for both down payment and closing costs. Depending on your lender, additional documents may also be required such as payroll vouchers, W-2 forms, investment account information and homeowners insurance policy details as well as recent tax returns or proof of income.
Your state and lender may permit you to move in right after closing is complete, however a walkthrough should be performed 24 hours beforehand to make sure any agreed-upon repairs have been completed and that the seller has left completely. Also make sure utility meters and water valves have been closed off prior to signing the final documents for your new home purchase.
Before your closing, read over your closing statement carefully. It will provide an extensive breakdown of costs related to closing such as loan origination fees, mortgage points, application fee, credit report fee, appraisal charges and prorated expenses and taxes as well as attorney fees and real estate commissions.
As part of your transaction, you will likely need to sign various documents. Typically, this will include reviewing and signing both the deed transferring ownership to you as well as the closing disclosure document that provides legal overview.
Once the signing has taken place, you will receive keys to your new home! Be sure to notify subscription services, creditors and acquaintances of your address change as well as mail forwarding arrangements. It is also wise to leave any manuals or warranties related to appliances, HVAC and any other household systems in a prominent place so the new owners can find them easily.