I'm ready to buy a home, what is the first step?
While attending open houses is much more exciting than filling out paperwork, the first step a homebuyer should take is getting pre-approved for a loan. This helps you determine how much house you can afford and set a firm budget. Sellers are also more inclined to take you seriously and consider your offer if they know the home is within your pre-approved limit.
How do I search for a home?
Start by viewing MLS listings on a real estate database, such as remax.com, Realtor.com or Zillow.com. Narrow down the results by searching for homes within your price range and with the desired number of bedrooms and bathrooms. Your real estate agent can and should research homes for you and make recommendations based on your criteria and financial ability.
How will my home purchase affect my taxes?
There are a number of tax benefits to buying a home, but filing your taxes can be a lengthy process if you aren’t used to itemizing. You can deduct your mortgage interest payments, as well as property taxes, points paid at closing, interest on home equity loans, lines of credit, and other items. A tax professional can help you decide what to itemize.
How does my credit score impact my home loan?
When determining how much home you can afford and whether you are eligible for a home loan, a lender will look at your credit score
. Typically, you need a score of 640 or higher
to qualify. The higher your credit score, the better lending terms you may be eligible for.
How much can I afford? And besides the mortgage payment, what other costs do I need to consider?
When you qualify for a home loan and look at the monthly mortgage payment it may see ‘doable’ but you must also factor in the additional costs associated with home ownership. Many times you can have your mortgage insurance and real estate taxes rolled into your monthly payment; however, additional utility costs, condo or homeowner’s association feeds need to be considered as well.
Should I get a home inspection?
Most Realtors unequivocally say yes, yes, and yes. A home inspector takes a weight off of your shoulders by looking into the condition of the roof, electricity, heating and air, plumbing and more. If some things are not up to par, you can negotiate with the seller to get those fixed before you sign the paperwork.
When can I back out if I change my mind?
Technically, buyers can always back out of a deal. Doing so without good reason may forfeit your earnest money
. Contingencies in your contract are great loopholes. For example, upon an unsatisfactory home inspection, the buyer can ask for their deposit back. Another loophole is ‘subject to appraisal.’ That means you can back out if the lender for your loan doesn’t think the property is worth what you offered. That said, you should only enter into a legally binding contract if you are serious and committed to the purchase.
Can I buy a home and sell my current one at the same time?
Yes, you can—but it’s the real estate equivalent of walking a tightrope. If you buy a home before you sell the one you’re in, you risk being overextended financially. If you sell before you buy, you might need to rent awhile before finding a new place. A possible way to do both at once is to write a “home sale contingency” into your contract. This means you only agree to buy the new home if you can sell the one you are in. In a very competitive market the seller may not accept a contract with a home sale contingency.
How do I know if the property is a good deal?
The best way is to check out comps—what similar properties are selling for in the area and whether those prices have been going up or down in the recent past.