You've crunched the numbers, thought about your lifestyle and made the decision to buy a home. It can be a complicated and stressful process. But knowing what to expect can reduce some of that anxiety and help you confidently find your way to your new home. Below are 6 major steps on how to buy a home.
1. What Do You Want in a House?
You've probably been daydreaming about your ideal home for years, but keep in mind, your needs can change. On average, it takes about five years to build enough equity to offset the costs of buying a home so it's safe to plan for the long-term. Think about how your needs might evolve over time, are you downsizing? Planning for a family? Are you moving to be closer to work? There's no perfect home. Finding the right home is about making the right trade-offs.
2. Credit Score
Before contacting a lender, it's smart to check your credit report. By law, you can get a free report once a year through Annualcreditreport.com. The report pulls data from the three major credit-reporting agencies: Equifax, TransUnion and Experian. Having the information in hand before you talk with a lender lets you dispute any errors in the reporting. The higher your credit score, the lower the interest rate on your mortgage. So what is a good credit score? You can expect a good mortgage rate at anything above 720. Homebuyers who pursue an FHA loan can usually secure a loan if their credit is 580 or over.
3. Get Pre-Approved for Mortgage
Mortgage pre approval should actually occur quite early in the home buying process. Be sure to tell your lender your budget and goals to see if they're realistic. In order to pull your credit history, lenders usually need some paperwork from you. Just because you get preapproval from a lender, doesn't mean you're locked in. Interest rates vary on a lender-to-lender basis, so look around.
4. Get a Real Estate Agent
Most home buyers will want a great real estate agent, specifically a buyer's agent, who will help them find the right houses, negotiate a great real estate deal, and explain all of the nuances of home buying along the way. There is a subtle difference between a real estate agent and a Realtor; the latter is a member of the National Association of Realtors and adheres to a code of ethics. Consider having a Realtor additional insurance that you'll get the help you need to ace the process.
5 House Hunt & Make Offer
Start touring homes in your price range. It might be helpful to take notes on all the homes you visit. You will see a lot of houses! It can be hard to remember everything about them, so you might want to take pictures or video to help you remember each home. Take as much time as you need to find the right home. Then work with your real estate agent to negotiate a fair offer based on the value of comparable homes in the same neighborhood.
Prior to the closing date, the buyer will want to verify with his or her agent, lender, and escrow company that all of the necessary documents have been signed and terms met. If they have not this should be taken care of immediately to ensure that there are no last-minute problems. The buyer will also want to verify what forms of payment are acceptable. On the closing date, closing costs and fees will be paid.
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Help! My Friend Is a No Show
Dear Armchair Psychologist,
I have a friend who doesn't reply to my messages about meeting for dinner, etc. Although, last week I ran into her at a local restaurant of mine, it has always been awkward to be friends with her. Should I continue our friendship or discontinue it? We've been friends for a total four years and nothing has changed. I don't feel as comfortable with her as my other close friends, and I don't think I'll ever be able to reach that comfort zone in pure friendship.
Dear Sadsies,I am sorry to hear you've been neglected by your friend. You may already have the answer to your question, since you're evaluating the non-existing bond between yourself and your friend. However, I'll gladly affirm to you that a friendship that isn't reciprocated is not a good friendship.
I have had a similar situation with a friend whom I'd grown up with but who was also consistently a very negative person, a true Debby Downer. One day, I just had enough of her criticism and vitriol. I stopped making excuses for her and dumped her. It was a great decision and I haven't looked back. With that in mind, it could be possible that something has changed in your friend's life, but it's insignificant if she isn't responding to you. It's time to dump her and spend your energy where it's appreciated. Don't dwell on this friend. History is not enough to create a lasting bond, it only means just that—you and your friend have history—so let her be history!
- The Armchair Psychologist