7 Steps to Owning a Home
Have you been dreaming about owning your own home – but you aren’t sure where to start? Buying a home for the first time is an exciting milestone – and a major financial commitment.
Let’s take a look at the seven steps you’ll take on your journey from renter to homeowner.
The first step is estimating how much house you can afford. The twenty-eight-thirty-six rule can help you calculate this. To qualify for a mortgage, lenders prefer that you spend no more than twenty-eight percent of your gross monthly income on your mortgage principal and interest, property taxes, insurance, and any homeowners’ association fees.
They also prefer that you spend no more than thirty-six percent on total debt – and that includes your mortgage principal and interest, property taxes, insurance, and any homeowners’ association fees plus car loans, student loans, credit card debt, and anything else you owe.
You’ll also need to consider upfront costs – like a down payment – and additional ongoing costs – like utilities and repairs.
The second step is selecting a mortgage lender or servicer for a home loan.
Your lender will meet with you and review your credit report and verify income, employment, assets, and debts– to determine how much money they could lend you – and at what interest rate.
Next, you’ll want to choose a real estate agent to help you through the home-buying process.
Your agent is there to assist you as a licensed professional to help protect your rights, get you access to homes for sale, and manage the complex buying process.
Now comes the fun part – going house-hunting and finding the home that’s right for you.
Narrow your search criteria and let your agent know your housing budget and what you’re looking for in a home, like: location, number of bedrooms, and square footage.
At showings, make the most of your time by going through the home methodically – and taking plenty of notes and pictures.
When you’ve found a home you love, it’s time for you and your agent to make an offer.
Your agent will write up a purchase offer, present it to the seller, and help negotiate counter-offers.
You will need to make an earnest money deposit of one to three percent once the purchase agreement is signed.
Now you’re in the home stretch – time for a little last-minute housekeeping.
Your lender will order a professional appraisal and a title search.
You’ll want to get a home inspection which can alert you to condition issues and needed repairs.
You’ll also need to obtain a homeowners insurance policy to protect your new home and its contents.
And finally – you’ve made it to closing day.
You and your agent will do a final walk-through to make sure everything looks right.
Then, you’ll meet with your and the seller’s real estate agent, the title company representative, and other professionals to sign the closing paperwork.
You’ll write a check for the down payment and closing costs.
And then – you’ll get the keys to your new home.
Homeownership has lots of financial and lifestyle benefits – but it can be a challenge for any first-timer.
That’s why it’s important to have a trusted financial partner – who can help you every step of the way.
If you’re ready to begin your journey – contact one of our friendly mortgage specialists today.