The desire to be a homeowner is the highest reported reason for buying a home among buyers under 65 years, while older groups are motivated by the desire to be closer to family and friends. Regardless of the motivation, purchasing a home takes time, and is affected by several factors. Financing is a major consideration when buying a property, with 26% of delays caused by money issues, according to the National Association of Realtors (NAR). Without the right funds or financing, it is difficult to purchase a house.
Get Preapproved For A Loan
Before shopping for the right lender and obtaining a pre-approval letter, be aware that mortgage rates differ from state to state. The variability depends on the market volatility, operational costs, foreclosures, and local laws and taxes. For example, lending rates applied on Chicago home loans are not the same as the mortgage rates in New York. It is also essential to consult several lenders so that you can determine the best interest rates and deals. In addition, check how much down payment you can afford. Current homeowners put 5% or less, although it is recommended to put down ‘earnest money’ (which is at least 20% of the value of the property) to avail of favorable loan terms and to avoid paying private mortgage insurance (PMI).
Prior to pre-approval, lenders will scrutinize your credit history and score, your debt-to-income ratio, your employment record, and your revenue, assets and liabilities. They will assess if you are financially capable of paying back your mortgage. After a thorough examination of your financial details, the lender will approve a specific loan amount that you can use to find a home that you can afford. Note that pre-approval letters are valid from 60-90 days, after which you will have to go through the entire process again to get a new one.
Shop For Your Home And Make An Offer
Once you have your pre-approval letter, connect with a reliable realtor and look for your dream house. When you find a suitable property, you can make an offer with the help of your real estate agent, inclusive of contingencies to protect you should you need to withdraw it. After acceptance of your offer, you just need to make a deposit to affirm your commitment. A home inspection will be carried out, and you might wait a while as your lender processes your loan and conducts an appraisal to assess the home value. Once all papers are processed and signed and closing costs paid, you will get the keys to your new place.
Buying your dream property, like any purchase, involves several processes. If you can get a head start and secure a pre-approval early on, the chances of concluding a home sale smoothly are higher.