Buying A Home
Buying your first home is a very exciting time, but it can also be overwhelming. After all, it's one of the largest investments you'll make in your life. At The Arkell Barnes Mortgage Team, we are here to help make sure your home buying experience is as stress-free as possible. We'll take good care of you and guide you through every step of the process.
Here is a breakdown of the steps in purchasing your first home:
Step 1: Polishing Up Your Credit
In order to get the best rate on your mortgage, you'll want the best credit score possible. Your credit score is basically a standardized method for lenders to determine how risky it is to lend you money. Thus, having a good credit score can ultimately save you thousands of dollars on your mortgage. Some of the factors that determine your credit score are payment history, the amount of money owed and the length of your credit history.
Step 2: Saving for a Down Payment
Down payments are typically paid in cash at closing and based on a percentage of the price of the home. Down payments can range between 0%-20% of the sales price depending on various factors such as type of loan and credit history. FHA loans, for example, may require less than 5% down, while VA loans for veterans or active duty military can obtain loans with no downpayment. Your loan officer will help you gauge which program best fits your needs and how much you will need for your downpayment.
Step 3: Calculate How Much House You Can Afford
In general, your new home shouldn't cost more than three times more than your gross annual income. Although this is a good formula to follow, it's also important you make sure you can afford the home by taking into account all of your current monthly expenses. Consider your entire budget: What are your credit card bills, student loans and car payments? How much will your new place cost to maintain? This calculator will help you estimate of what you will be able to borrow.
Step 4: Get Pre-Qualified for a Loan
It's best that you get pre-qualified for a a mortgage before you even start viewing houses to purchase. Starting to look for a home without a pre-approval is like going shopping for groceries without your wallet. The pre-approval process involves having your lender examine your entire financial situation and history. Based on the information you provide, the lender will provided you with an estimate of the amount you will be able to borrow. The Arkell Barnes Mortgage Team offers pre-qualifications to borrower's at no charge.
Step 5: Shop for a Home
Make a list of the features you are looking for in a home. Having a real estate agent represent your interests is critical and helps to narrow down properties based on the criteria you give them (neighborhood, amenities, schools, etc.). The Arkell Barnes Mortgage Team can help connect you with one of our preferred real estate partners to ease the decision making process. In most cases, having a buyer's agent doesn't cost you anything. The buyer's agent splits the commission with the seller's agent, so the real estate agent services are essentially free to you.
Step 6: Make an Offer
Your real estate agent should evaluate market conditions and help you make a reasonable offer. The agent can access historical price data for home sales in your area. Having this information will help the agent in recommending a bidding strategy by looking comparable properties and other factors, such as how long the property has been on the market, median sales price in the neighborhood and how many price cuts there have been since the home has been on the market.
Step 7: Sign a Sale Contract
After an offer is accepted, you would then sign a sales contract on the property. Make sure you read the contract very carefully as it is a legally binding document. The contract should include what is and isn't included in the sale of the home. Items like appliances and playground equipment may stay or go, depending on the deal that has been negotiated. In addition, scheduled repairs and timeframe for work to be completed is usually stated in the contract along with a contigency on inspections (termite, well, septic, infrastructure, etc.) There will also be a deposit required as part of the contract and a decision will be made on who will hold the deposit.
Step 8: Take a Closer Look at Your New Home
Be sure your contract is contingent on a home inspection for a detailed, objective evaluation of your home’s infrastructure. After the inspection, you and your agent should negotiate the price of the home with the seller over needed repairs. Also, be sure the title of the house is free of any liens.
Step 9: Shop for Homeowners Insurance
Shop around, but the company you carry your car or life insurance through may give you a good package deal. As always, a higher deductible will save you money.
Step 10: Sign Papers and Close on the House
You’ll meet at The Arkell Barnes Mortgage Team's office, lawyer’s office, or Title Company to sign papers and receive the keys to your new home.