Whether you have a lot of experience or are a first-time house buyer, it can be very stressful to purchase a house. It is a complex process that involves very strong emotions - after all, it is your home and what might be the largest financial investment you will ever make in your life.
Even when the process appears to be running smoothly, it takes just one mistake for the deal to be killed. Your financing might fall through at the very last minute, hidden problems could be revealed by a home inspection, another buyer could give a higher offer, or an appraisal might come in under the sales price, which can affect the mortgage terms. There are many "coulds" involved.
No matter how hard you might try, there are certain aspects involved in purchasing a property that is beyond your control. Fortunately, there are certain things you can do to help minimise the stress of buying a house:
1. Know What You Want
Your real estate agent is unable to read your mind. Also, if you are not sure what you want, then you will end up spending lots of time looking for homes that don't match your wants and needs. When you have specific requirements in mind, it can provide some direction and help your agent find the best house for your entire family.
The following things should be considered:
- Number of bathrooms and bedrooms
- Multi-level or one-level
- Type of exterior (vinyl, brick, or wood)
- The community's noise level
- Desired square footage
- The floor plan's practicality
- Type of housing (single-family home, townhouse, or condo)
- Distance to work
- Distance to expressways and shopping
- Distance to churches
- Age of the house
- How much maintenance is required
- School districts
2. Get Pre-Approved on a Mortgage Loan
There can be serious headaches involved in trying to finance a property. You might feel that it should not be too hard to qualify for a home loan. However, after carefully reviewing your income and credit, a lender might not feel the same way.
Getting pre-approved on a mortgage before you start to bid on houses is always advantageous. If you fall in love with a certain house and then discover that you are not eligible to finance it, you could be left feeling pretty sour. Save yourself all of the stress and heartache by getting all of your financial information in place before you start hunting. Also, some agents and sellers choose wisely and will only work with buyers who have pre-approval from a mortgage lender.
“To help ease your pre-approval path, clean your credit up by making sure to pay all of your bills on time. That will increase your credit score, and you will be viewed by banks more favorably, and help you qualify to receive the best interest rate possible. Also, be sure to keep all of your recent bank statements and income records handy. Lenders will ask for his information when they are determining whether you are eligible or not for a mortgage.” advised mortgage and small business loan expert Shane Perry of Max Funding.
Another thing that can help you qualify to get a mortgage is to pay down your consumer debt since lenders use your debt-to-income ratio when determining whether to approve your application or not. However, although it is important to repay debt, do not sacrifice building yourself a financial cushion to do this. It is expensive to buy a house, and you will need money for your mortgage fees, moving expenses, furniture, repairs, and other expenses.
3. Pay Attention to What Your Real Estate Agent Tells You
You can become educated about the house purchasing process. However, unless you have a real estate background, there is a good chance that your real estate agent will know much more than you do. You selected this professional to help you find your dream home, so it makes sense to listen to the advice that they give to you. Once you have provided the details of your dream house, allow your agent to help you reach it.
4. Be Flexible
If you wrote out a detailed checklist of precisely everything you want your perfect home to have, understand that there is no such thing as the perfect house - that is unless you have enough money to design one and build it from the ground up.
Review your wants and prioritise them and decide which features you can do without. If you would like to have a home with a pool, impressive foyer, four bedrooms, a laundry room upstairs, a remodelled kitchen, and a big master bathroom, you should be prepared to give up other features--or pay higher!. However, that doesn't mean you cannot find a home that has most of the items on your priority list.
5. First, Pay Your Debt
Most people who are investment savvy have debt on multiple assets already. However, the average individual attempts to avoid debt whenever possible. If you have teenagers who will be going to university soon, unpaid medical bills, or education loans, you may not want to invest in investment properties right now. Aim to pay 75% of your current debt at least before you invest in more real estate.
6. Save Enough Money
Purchasing a house is one of the most expensive transactions that you will ever make in your life, so make sure you understand all of the expenses that go into purchasing a home before you leap. You will be financing a large amount of money, and there are also mortgage-related expenses and closing costs, including home inspections, home appraisals, and earnest money deposits. You might need to pull out if you run out of money in the middle of the deal.
So what should you expect from the process? The mortgage lender will require you to make a down payment. Usually, it will run from 3.5% to 5%, depending on the kind of loan it is. There are also credit check and mortgage application fees to pay, in addition to your earnest money deposit, appraisal fee, and home inspection. Also, don't forget about closing costs. They tend to run from 3% to 5% of the balance of the mortgage. Closing costs include credit report fees, recording fees, underwriting fees, title search, title insurance, discount points, and origination fees.