You have decided to take the plunge and enter the property market but you don’t know where to start. Let’s go through the process step-by-step so that you know what it entails.
Do your homework
Start saving
Saving for a home should start long before buying one. Your chances of getting a mortgage increase greatly if you can show a lender that you have saved some money for a deposit.
Check your credit record
A good credit report improves your chances of being approved for a mortgage. The higher the score, the lower the interest rate you’re likely to pay because you’re viewed as a lower-risk proposition.
Assess your financial situation
A mortgage is a secured loan using a home as collateral. You need to identify what monthly mortgage payment you can afford. Most lenders have affordability calculators on their websites that can help you to assess this.
Find out about types of mortgages and interest rates
Doing some research can help you to understand more about what’s available. For example, you should understand the difference between fixed and variable mortgage rates.
Get mortgage pre-approval
Getting mortgage pre-approval is critical because buying a home is probably one of the most important financial transactions you will ever make. It’s far better to go into it knowing how much you can sensibly afford. When you find a house within the right price range, you can confidently make an offer.
Pre-approval does not necessarily mean that you will get financing but is basically an assessment of your financial situation at the time, taking factors such as your annual income, assets and debts into consideration.
Find a home
Pre-approval will last for 60 to 120 days, depending upon the lender. It helps you to hire a seasoned realtor to help you find the right home. Narrow down the search by deciding exactly what you’re looking, such as type of dwelling, number of bedrooms and bathrooms etc.
When looking at a home, focus on the house and not the décor, take photos, and identify any defects and what it would cost to fix them. Revisit the home at different times of the day, take your time and look around thoroughly.
When making your choice, you need to factor in key lifestyle needs, such as commuting time to work, good schools, manageable property taxes and resale value.
Make an offer
Your realtor is likely to know the prices of other homes in the area and know whether the price is reasonable or not. The realtor may even be able to negotiate with the seller for a better price. Once the price has been decided, you need to submit a formal offer to the seller for acceptance. If the seller accepts, your next step is to secure approval for your mortgage.
Get Mortgage approval
Undergoing a credit check is part of the process, so make sure not to get new credit cards or take out loans or it could affect mortgage approval negatively.
The loan provider will get the home appraised by a professional home appraiser to make sure that it’s valued at near or above the sale price.
A home inspection will ensure there are no cracks in the infrastructure, mold, leaks in the roof and other defects that could be costly to repair.
Once the home has been properly valued and deemed to be in good condition, the mortgage lender will approve the mortgage.
The process of transferring the property into your name can begin. When you move into your new home, you’ll know that you’ve followed the right steps and bought it on your terms and to your maximum financial benefit.
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