Understanding the basic steps buying a home can help you reduce some anxiety and unanticipated steps in the buying process. We’ve outlined step-by-step guide to the home buying process. You can swap the earlier steps, but we highly recommend to get pre-qualified/pre-approved before finding the perfect home.
Start with your credit
Credit reports are kept by the three major credit agencies, Experian, Equifax, and TransUnion. Your credit report shows if you have any serious credit problems in the past. Usually the higher your credit score the better interest rate you will qualify for.
Shop for a mortgage before you shop for a house. You will know how much you can borrow before you fall in love with a home. Get pre-approved. Sellers love buyers who are pre-approved. Pre-approval means that the lender is ready to give you a loan after seeing your financial status. Pre-qualified means that the lender is estimating what you could borrow.
Find an agent
Find a real estate agent to represent you. Once you find your realtor give detailed information what you want in a home, including number of bedrooms, bathrooms and access to your preferred places.
Search for a home
Look for houses within your price range in the neighborhood you want to live in. See Market Insight: Real Estate for housing market data for cities in San Fernando Valley. It is recommended to buy the least expensive home in a neighborhood. When homes around you sell far more money then you paid, your home’s value increases. Remember your house is a long term investment.
Enter a contract
Have your agent review this document with you to make sure the deal is contingent upon: you obtaining a mortgage, a home inspection, walk-through inspection 24 hours before closing. Also be ready, you may get a counter offer form the seller – usually if there are multiple offers or your offer does not meet sellers expectation. You will also require to make a good- faith deposit usually 3% to 10% of the purchase price – if the deal falls through you will get your money back if it failed any of the contingency clauses.
Secure a loan
Call your mortgage broker or bank and decide whether to go with the fixed/adjustable rate or if you will pay any points. You will need to pay for credit check and closing costs.
Get an inspection
You should hire a home inspector to look for any safety issues and defect. Any signification defects identified during the home inspection will allow you to back out of the offer (free of penalty), have the owner fixed the defect or deduct from the home price cost of fixing the defect. Home inspection costs about $300 on average.
Close the deal
Close escrow and sign documents. Work with your lender to finalize your loan and review all charges you are expected to pay at closing.