Buying A Home
When it comes to buying a home, sometimes things can become overwhelming. Spokane4 strives to take the complexity out of the situation and break things down step by step for home buyers:
1. Education
Opportunities for the first time home buyer are out there and continuing to grow. Keep up to date with the latest stimulus news and look into attending a 1st time home buyer’s class (if applicable). Another thing to take into consideration is that buying a home may not be the best choice financially. A good rule of thumb is to make sure that your mortgage payment is less than 1/3 of your net monthly income.
2. Budget
What you can afford depends on your income, credit rating, current monthly bills, down payment and the interest rate. Eliminate credit card debt to build credit and decrease money spent on interest. After you credit is in good standing, it is recommended to have six months of expenses saved to accommodate for unplanned events. To achieve this, set goals for investing by treating your investments as expenses.
3. Finding a Lender
Shop for the “best mortgage rates” and find a loan officer to assist you in the loan process. There are 5 major types of loans: Conventional, Sub Prime, FHA, VA and USDA. Check out www.fanniemae.com for details on each type of loan. In addition to the types of mortgage loans, many additional down payment programs are available in Washington State that includes: House Key Plus, Home Choice, House Key Schools, House Key Veterans and House Key Rural programs. Spokane Neighborhood Action Programs (SNAP) offers a great loan option for lower income buyers, where the buyer must only pay 3% of the purchase price down.
4. Pre-Approval
Being pre-approved for a loan will give you a more precise $ amount when looking for a home. It will also let sellers know that you are serious about buying their home and that can give you the edge in terms of negotiating.
5. Prioritize
Know what you want in a home and what you are willing to let go. For example, if living in a safe neighborhood is your top priority than don’t waste time searching for properties in areas of town that have high crime rates. A Realtor can help you in this process by providing experience and the proper tools to refine your search.
6. Home Search
Find a Realtor that can assist you in the purchase of your home. They will be able to walk you through the process of searching for a home, a home inspector, exc. “Why use a Realtor to assist you in buying your home?” It is important in saving time and money to search within the Multiple Listing Service (MLS) to “view listed properties.” Having the inside knowledge of a Realtor will allow you to know if a certain area of town is “hot” and needs immediate action or is “cool”, allowing for additional planning.
7. Negotiate the Deal
The buyer’s offer is usually presented with a cash deposit known as earnest money. This money will be applied to the closing cost if the transaction is completed. It is common to receive a counter offer and your Realtor will be able to help you decide if you should accept or submit your own counter offer in return. After the offer and earnest money are presented, the closing will take place anywhere from 30-60 days from that time. This time frame normally depends on the turn around time of your mortgage financing.
8. Closing
The closing of the sale is the final stage in home ownership. During the closing your loan application will be submitted to the lender. A good faith estimate will be presented to give a general idea of the total cost. Make sure to have your Realtor review the good faith estimate to check for missing costs and make any corrections that may be needed. Concluding the process, the seller and buyer sign the purchase & sale agreement. Then you are ready to move into your new home!
