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The Home Buying Process

Steps to Buying a Home

Step 1: Check Your Credit Report & Score

Before applying for a mortgage, you should always check your credit. According to the law, you're allowed to receive one free copy of your credit report per year. You can do this by visiting Annual Credit Report.  Scores range from approximately 300 to 850; generally, the higher your score, the better the interest rates will be for your home loan. Don't forget to check your report for errors. Disputing errors will likely improve your credit score.  You can also check your credit score for free at Credit Karma.

Step 2: Find the Right Lender and Real Estate Agent

To find the right mortgage lender it’s best to shop around. Get recommendations from your friends, family and most importantly, your Realtor!  Working with a local lender will make the transaction go much more smoothly, and will be an important factor for a seller as they are reviewing offers from buyers.  Make sure to find someone that you are comfortable with and who makes you feel at ease.

Once you have chosen a lender, make sure you get a pre-approval. Pre-qualifications are only a guess based on your credit score and what you tell the lender, about your income and debt whereas a pre-approval will give you a better idea of how much you qualify for once you have provided the requested financial documentation required by the lender.  A pre-approval will make your offer stronger in a seller's eyes, and can make the loan process go a little quicker.  

Step 3: Look for the Right Home

Make a list of the things you'll want in your new home features.  Ask yourself how many bedrooms and bathrooms you'll need and get an idea of how much space you desire. 

Once you've made a list of your must-have's, don't forget to think about the kind of neighborhood you want, types of schools in the area, the length of your commute to and from work, and the convenience of local shopping. 

Step 4: Make an Offer on the Home

Now that you've found the home you want, it's time to make an offer. Our experienced agents can offer you the guidance you need to make a competitive offer based on the current market conditions.  Once you've made your offer, don't think it's final. The seller may make a counter-offer to which you can also counter-offer.  In a strong seller's market, you may want to make a strong first offer, possibly with an escalation clause, knowing that you may be competing with several other buyers.  Once you and the seller have agreed on a price and an offer is officially accepted, you'll make an earnest money deposit that goes in escrow to give the seller a sign of good faith.

Step 5: Get the Right Mortgage for Your Situation

There are many different types of mortgage programs out there, and you should be aware of the three basics: adjustable rate, fixed rate and interest-only.

Adjustable rate mortgages (ARMs) are 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, anywhere from 15 to 30 years.  These are good for people who like a predictable payment and plan on living in their home for a long time.

An interest only mortgages require the borrowed to pay only the interest in monthly payments, and are rarely a good idea for a buyer.  

Step 6: Home Inspections

Make sure you get a home inspection. It will be well-worth the money spent since it ensures the property's structural soundness and good condition.  Depending on the agreed upon price and the seller's circumstances, sometimes repairs needed can be negotiated and completed before closing.  

Step 8: Closing Day!

Once inspections, title work, appraisal and financing are all taken care of, it's time to set a closing date! 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. Choosing an experienced home loan lender and a friendly, knowledgeable Realtor is the key to helping you have a smooth home buying experience!