By Sterling Xie
This article will provide a general outline of the steps you need to take when considering buying property.
The first step to purchasing property is checking your credit report, a report of your trustworthiness (meaning your ability to pay back credit you take out on your credit card), before you allow a lender to check your credit score. Note that taking out your credit report may decrease your credit score. Three major credit reporting agencies—TransUnion, Equifax, and Experian—provide a free credit report every year. When you check your credit score, use the FICO score rather than the Vantage score as your lender will base your credit score on the FICO score.
Next, you want to get pre-approved, allowing you to figure out how much the loaner is willing to loan to you. Gather your financial documents such as income statements, W2s, tax returns, assets records, debt records, and bankruptcy records to submit to banks and loan companies. They will evaluate your debt-to-income ratio, credit, and other important measures before estimating how much they are willing to lend you. Finally, they will give you a letter of pre-approval, showing the seller that you are truly serious about purchasing a property.
Start House Hunting
This could mean finding a real estate agent that can help with the entire house-buying process, providing insight on local house markets, understanding when it’s time to buy, finding optimally-priced houses, negotiating, helping set up offer prices, and almost anything you need help with. Otherwise, this would mean finding houses with good neighborhoods, schools, prices, and anything else you consider important.
Making the Offer
The Comparative Market Analysis (CMA) provides analyses of the prices of houses across America. Using that as a base for your offer would ensure fairness. Also, while considering the house, ask for disclosure documents that document the activities which have occurred on a property such as natural disasters. Also, if asked for an initial deposit, make sure to have a good earnest deposit to demonstrate that you are serious about purchasing. Lastly, make sure you fulfill the contingencies on all your contracts—between you and your lender and between you and the seller. The lender will use these contingencies to ensure they are not overpaying your loan.
Inspect the House
Inspect the house for any damage and purchase homeowner’s insurance.
You’re ready to buy!
Hopefully, this article made the complex and stressful home-buying experience just a little less stressful.