You have made the decision to buy a new home. Whether it is your first home or your 10th purchase, the process is the same. Unless you are paying all cash for your new house, you will need to get a loan - a mortgage. In order to qualify for a mortgage, you need to check your credit by reviewing your 'credit report' to see what your 'credit score' is. Your credit score or 'FICO' score is a evaluation of your credit payment history and record of how responsible you have been in the past with your use of credit. Credit Scores range from 300 to 850 (which is the best). In order to get your credit score and report, you need to get your one free copy of your credit report; which the law allows you to do once per year. Just go visit AnnualCreditReport.com and follow the instructions to receive your report. Generally, the higher your score, the better loan is that you will qualify for. Remember to review the report for mistakes and if there are any, dispute them as it can help your score improve. You can also use sites like CreditKarma.com to get your credit score. But, getting your actual credit report is important. So do not skip that step. You should also review your finances, expenses, monthly bills, savings and see what money you will have available for any down payment and closing costs.
Before you start looking for that perfect home, you need to know what you can afford. With your credit history and credit score in hand, and now knowing what your budget and available funds are, you can now calculate how much you can afford by starting online. There are several online mortgage calculators that will help you calculate an affordable monthly mortgage payment; such as the ones found at BankRate.com. Don't forget that you need to factor in how much money you'll need for a down payment, closing costs, fees (such as fees for an attorney, appraisal, inspection, etc.) and the costs of any remodeling. Down payments can be from Zero to 20% or more depending on your finances and the type of loan you are getting. An experienced home loan expert can help you understand all your loan options, closing costs and other fees.
Many suggest you find your lender first and then your real estate agent second. That's OK but many times finding your agent first is better because they can then help you find a qualified mortgage lender that is right for you. Getting the right agent is a serious personal choice. You want someone who is well trained, professional and experienced in the Market you are looking in. Ask around, talk to your friends and see how active they are in your area. Then, when you meet with them, ask a lot of questions, and put in the time to find an agent who makes you feel comfortable, secure and at ease. Once you have found your agent, discuss your financing needs and goals and then start interviewing mortgage lenders. Again, it's the same process - get recommendations from your Agent, friends and family. You should even interview your bank that you currently deposit with. Find the right fit and choose your new mortgage lender. accordingly.
Once you have found the right mortgage lender, make sure you go over your mortgage loan needs and wants and then get a pre-approval letter. These pre-approval letters are usually based upon pre-qualifications from your lender and are only based on what you tell the lender and are no guarantee of ultimate final approval but it does mean that you have met the minimum requirements for the loan you are applying for. This pre-approval will give you an advantage over other buyers who are not pre-approved. And, many sellers are now requiring pre-approval letters before they will even consider an offer. Now that you are ready with your Agent, Mortgage Lender and your Pre-Approval Letter, you can now start the fun part of the process and find your perfect home.
There are many different types of mortgage programs out there. If you are a repeat buyer of a home, you are already familiar with the various types of loans available; but there may be new products or loan rules in place since you last bought a home. So getting re-acquainted with the loan products now available would be smart. However, if you are a first-time home buyer, you should be aware of the three basics: adjustable rate and fixed rate loans and the type of loans available.
Adjustable rate mortgages (ARMs) are generally short-term mortgages that offer an interest rate that is fixed for a short period of time, usually between one to seven years. After that, the interest rate can adjust every year up or down, depending on the market. These are good for people who don't plan on living in their home very long and/or are looking for a lower interest rate and payment.
Fixed-rate mortgages are more traditional and offer a fixed interest rate (and thus a fixed monthly payment) for a longer period of time, usually 15 or 30 years, though they're available in 20 or 25 year terms. These are good for people who like a predictable payment and plan on living in their home for a long time.
Both fixed and adjustable rate mortgages can have an interest-only payment component. What this means is that for a certain amount of time during the loan term, you're allowed to pay only enough to cover the interest portion of your payment. You can still pay principal when you wish, but don't have to if your budget is tight. There is a myth that with interest-only mortgages, you don't build equity. This is not necessarily true, since you can build equity through home appreciation. The benefit to interest-only mortgages is that you increase your cash flow by not paying principal.
Then there are the types of loans you may wish to consider: Conventional, FHA, VA, USDA and others that may work best for your unique circumstances. Remember to ask your Mortgage Lender and Agent lots of questions about which mortgage is right for you and your situation.
Now that you know what you can afford and have your financing ready to purchase that new home, you will begin working with your Agent to figure out where you want to live, what kind of home you want, and all of the other details that matter to you such as size, configuration, etc. Make a list of the things you'll need to have in the house. Ask yourself how many bedrooms and bathrooms you'll need and get an idea of how much space you would like. How big do you want the kitchen to be? Do you need lots of closets and cabinet space? Do you need a big yard for your kids and/or pets to play in? Are schools, driving time to work, shopping and crime rates important to you? Tell your Agent everything that matters to you and your Agent will begin the process of searching the area for properties that fit your requirements.
Once you have discussed your wants and needs for your new home with your Agent, they will work to find you that perfect home. After looking at homes with your Agent and finally finding the one you want, your Agent will begin the process of getting you that poperty.
Now that you've found the home you want, you have to make an offer. Most sellers price their homes a bit high, expecting that there will be some negotiations involved. After discussing your offer strategy with your Agent, make an offer that is based upon the price that you feel is right; especially in light of the other home prices or 'comparable' in the area. Depending on the area you looking in, homes generally sell for approximately 94%-96% of the Listing Price (assuming the Listing Price was correctly set); so making that first offer at a fair amount is critical. Some suggest starting at 10% below the Listing Price. Once you've made your offer, don't think it's done; it's just the beginning. The seller may make a counter-offer to which you can also counter-offer. But you don't want to go back and forth too much. Somewhere, you will need to come to an agreement and if necessary, meet in the middle. Once you've agreed on a price and terms (which can include contingencies like inspections, insurance, title and time frames to follow), you'll will likely make an earnest deposit (which is money that goes into escrow to give the seller a sign of good faith and eventually be applied to the purchase price).
After signing the Purchase Agreement, there are a number of things that will need to get done. An Inspection of the home is an absolute must. Get a good home inspector and have the home thoroughly inspected. Get your insurance quotes, make sure your lender is moving along with the underwriting approval process and getting the appraisal done. Termite Reports get ordered, reviewing any seller's disclosures, your professional and personal inspection of the home and many other things will need to get finished before you can Close on the property, take title and move in. All of the 'contingencies' and reviews are critical for home buyers in Alabama, since Alabama is a "Caveat Emptor" (Buyer Beware) state. As a home buyer, all of the responsibility of making sure the home is OK and free of any issues is almost exclusively on you, the buyer. The job of making sure that all of the systems, structure and condition of the home are satisfactory for you sits squarely on your shoulders. That's why choosing the right agent is so important. Even still, you need to make the effort to do your own due diligence and make sure, as best you can, that the home is right for you.
Setting the closing date with the closing agent, considering the seller's input and doing those last minute things that always seem to happen with closings, patience and being calm is advised. And having a great agent; like one from InfinitySouth Realty, who can help you navigate the process and assist you in dealing with the complexities you'll encounter. Your Agent should strive to make the entire experience easy and without stress. That's what InfinitySouth Realty agents do - We exceed your Expectations.
Lastly, talk to your mortgage loan professional to understand all the costs and expenses that will be involved with the closing so there are no surprises. Closing costs will likely include (but are not limited to) your down payment, title fees, appraisal fees, attorney fees, inspection fees, and points you may have bought to buy down your loan's interest rate.
You got your mortgage, paid your down payment/closing costs and finally closed the deal and now it's time to move in! Whether you use a mover or not is up to you, depending on your financial situation and how much stuff you have to move; perhaps also, whether you have a lot of friends willing to help you move. Either way, you're done with the home buying process! Just start unpacking and start enjoying your new home!
Buying a home for the first time doesn't have to be a hassle if you're prepared and you know what to do and when to do it. Your Agent should still be there for you even after the Closing to give you any advice or help you may need.
Choosing an experienced agent and a qualified home loan lender makes a huge difference in the home buying process. Most importantly, a friendly, knowledgeable real estate agent who knows your area is key to having a stress-free and smooth home buying experience. If that's what you want, then give InfinitySouth Realty a call today and let's connect you with one of our fantastic Agents and find you that perfect home you have been dreaming of.
Don't settle for second best, Call InfinitySouth Realty Now at (251) 444-0000.