The home-buying process can be confusing, especially for first-time homebuyers. This is a decision that has many facets and having a professional to help you along the way is a must. The basic steps are pre-approval, house hunting, offers, escrow, inspection and approval, and closing. Here are some tips and tricks from Rocket Mortgage.
Know Where You’re At
One of the biggest steps and most important is to get pre-approved. In order to get a pre-approval letter, yo will need to list your finances, find out your credit score and figure out how much you are able to put up for a down payment.
“The biggest topics that can create stress and confusion are figuring out down payment options and understanding their finances,” says Eileen Tu, Vice President of Product Development for Rocket Mortgage.
After your pre-approval the house hunting begins. Remember to take your time looking at each property as this will more than likely be your home for years to come. A real estate sales agent will help you along the way and get you familiar with reading real estate listings, going to open houses and talking to real estate agents. An agent can help you with negotiations by submitting your offer and receiving any counteroffers. In today’s market there are still bidding wars, so be prepared to make more than one offer on more than one property.
“When an offer is made on a home, the seller may require the buyer to pay earnest money – which is held in an escrow account until the buyer and the seller negotiate a contract and close the deal. With the earnest money, the seller is more confident that the buyer is serious and will not back out of the deal – and it protects them if that happens or the sale falls through,” says Tu.
Get the Right People on Your Team
Having a good team behind you during the home buying process is crucial. Start with a real estate agent, as they can also recommend mortgage lenders, house inspectors, closing attorneys and more. Ask around and see if you have any friends or neighbors that have a real estate agent that they can recommend.
You should interview several agents to find the right one for you. Matching up their personality with yours and knowing their top priorities can help you make the best decision. You also want to make sure that the real estate agent you choose, knows the local area that you are searching for a home in.
Learn the Terms
Mortgages have many terms and you need to be familiar with them if you are going to step into homeownership. One of the biggest to understand is how a mortgage is calculated. “A mortgage point – sometimes called a discount point – is a fee paid to lower the interest rate on a home purchase or refinance. One discount point costs 1% of the home loan amount. For example, if a homebuyer takes out a mortgage for $100,000, one point will cost $1.000. Purchasing a point means the interest is prepaid to result in a smaller monthly payment, and can greatly reduce the amount of money paid in interest over the life of the loan,’ explains Tu.
If you are in the process or want to get involved in the process of buying a home, the first step to take is to contact a local real estate agent. A local real estate agent can help you with the homebuying process from start to finish.
