Whether you’re escaping the rental market, relocating for a higher quality of life, or expanding your real estate portfolio, purchasing a home of your own is a significant financial achievement. Reaching this important goal requires patience, dedication, and a solid understanding of the home buying process.
With some real estate analysts predicting that 2024 will be a challenging market for both buyers and sellers, it’s more important than ever that prospective homeowners be informed and well-prepared for every step of the home buying journey. In this guide, we’ll walk you through each important step of becoming a homeowner, including getting pre-approved for home loans, along with additional resources to help you master all aspects of buying a home in 2024 and beyond.
1. Check Your Credit
Your journey to homeownership begins with understanding your financial standing, starting with your credit score. Your credit score is more than just a figure -- it's a reflection of your financial history and a key factor in determining your mortgage eligibility:
- Request your credit report from major bureaus like Equifax, Experian, and TransUnion using AnnualCreditReport.com and take advantage of free apps like CreditKarma to check your credit score frequently
- Check your reports for any errors or unrecognized accounts as these can negatively impact your score
- If your score is lower than desired, improve it by paying bills on time, reducing debt, and not opening new credit accounts in the short term
2. Get Pre-approved for a Mortgage
The next pivotal step is securing pre-approval for a mortgage. This process goes beyond just knowing what you can afford -- it's about showing sellers that you are a serious and well-prepared buyer:
- Collect documents such as W-2 forms, tax returns, pay stubs, and bank statements, which lenders will need to assess your financial status
- Compare mortgage terms, interest rates, and fees from various lenders to find the best fit for your financial situation
- Understand pre-approval vs. pre-qualification -- pre-approval involves a more thorough check of your financial background and gives a more accurate picture of your loan amount and interest rate
- Don’t be apprehensive about damage to your credit from seeking a mortgage loan -- applying to multiple lenders within a short amount of time is typically treated as a single inquiry
3. Find a Real Estate Agent
Finding the right real estate agent is like choosing a purchasing partner for your home buying journey. A good agent is not just a mediator in transactions but a trusted advocate for your interests. The right agent is instrumental in making your home buying process successful and less stressful:
- Research and select an agent by looking for agents with positive reviews, a strong track record in your target area, and personal referrals
- Choose an agent who understands your specific needs, budget, and style preferences
- A good agent will advocate for you, negotiate on your behalf, and guide you through the complexities of the home buying process
- Put your agent to work and allow them to hunt for available homes based upon your specific preferences using specialized resources and expanded search capabilities
4. Home Shopping
Now comes the most exhilarating part of the journey; searching for your new home. This stage is about more than just browsing listings -- it's about envisioning your future and finding a house that aligns with your aspirations:
- Prioritize your needs by making a list of essential features you need in a home, like the number of bedrooms or proximity to work
- Consider important factors like neighborhood, local schools, commute times, and community amenities
- Explore various homes within your budget to understand what’s available and to refine your preferences
- All homes have pros and cons so it’s important to weigh each carefully and understand your priorities
- Stay aware of the fast-paced nature of many real estate markets and work with your agent to ensure that you’re shopping and moving through the process at a nominal speed
5. Get a House Inspection
Before you finalize your decision, a thorough home inspection is important. This step is not merely a formality; it’s a safeguard against unforeseen issues that could affect your investment. A detailed inspection can provide peace of mind and save you from future headaches:
- Pay for your own inspection and choose a licensed inspector to conduct a detailed examination of the property
- Request that the inspector check the structure, roof, electrical, plumbing, HVAC systems, and more as part of a comprehensive and thorough inspection
- Use the inspection report to negotiate repairs or a price reduction if you choose to proceed with the purchase
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6. Close on Your Home
Closing on your home marks the culmination of your home buying journey. This final step involves more than just signing documents -- it's the moment where your dream of homeownership becomes a reality:
- Perform a final walkthrough and verify that identified problems have been addressed and corrected to your satisfaction
- Avoid making large purchases prior to closing on your new home
- Understand and sign various legal documents, including the mortgage agreement and property transfer papers
- Be prepared to pay fees like loan origination, appraisal, and title search fees, which typically range from 2% to 5% of the purchase price
- Once all the paperwork is completed and funds are transferred, you'll receive the keys to your new home
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7. Get Additional Information
Preparation is key for those about to buy their first home or those who are re-entering the real estate market. Fortunately for homebuyers, there are significant resources available for those looking to get informed about the current homebuying process, some of which may include down payment or closing cost assistance upon completion of the course:
Homebuyer Education & Online Classes by credit.org
eHome America Online Homebuyer Education
HomeFirst Down Payment Assistance Program (New York City)
Understanding the process and methodically working through the steps of buying a new home is the best way of fulfilling one of the most rewarding goals of a lifetime. Preparing paperwork, setting aside adequate time, choosing the right partners in real estate and finance, and taking advantage of educational resources can help ensure a stress-free journey toward homeownership.
Palisades Credit Union is ready to make your dream home a reality!
Palisades Credit Union offers personalized mortgage services for homebuyers and homeowners. Our experienced local lenders provide tailored advice and support for first-time buyers, second and third home buyers, those looking to refinance, and others.
Check out today’s rates, take advantage of our free online mortgage calculators, contact us online or call us at 844-336-1744 to get started today!
Disclaimer: This article is for informational purposes only. For advice regarding your specific financial situation, please consult a financial planner or a trusted financial professional.
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