A Simple Guide to Buying a House
One of the biggest decisions that anyone can make in their life is purchasing a home. Before you purchase a home and apply for a mortgage, get acquainted with the basics of the home financing process. Follow these 8 basic steps to familiarize yourself with common terms and milestones, and to ensure a smoother overall experience. We will guide you through the home financing process to ensure that you are fully prepared before you apply for a mortgage.
Step 1: Check Your Credit Score
A credit score is an important factor in the home buying process. Lenders use a credit score as one resource to determine an interest rate. Establishing a good credit score early on will make it easier to get approved for a loan in the future. Click here to learn more about improving upon and maintaining a good credit score.
Step 2: Determine How Much House You Can Afford
It is important to understand your annual household income and average monthly expenses in order to determine a manageable monthly mortgage payment. Understanding how much you can afford before working with a real estate agent will help you narrow down your property search. Use our mortgage payment calculator to see how much house you can afford.
Step 3: Get Pre-Approved
A pre-approval also helps you know in advance how much house you can afford. We will examine your financial information to determine which loan you qualify for, and for how much. Getting pre-approved will increase your negotiating power when making a purchase offer.
Step 4: Gather Documentation to Apply for a Mortgage
Now it’s time to apply for a mortgage! Gather all of the proper documentation to submit a complete application. To learn more about the loan application and documents you may need, click here.
Step 5: Begin House Hunting
Once you are pre-approved and have begun the loan application process, you will want to start searching for a property within your price range. Working with a real estate agent can help make this part of the process less frustrating. When you find the right property, the terms of the sale will be negotiated, including the price and potentially the terms of the loan being sought. If you are unsure whether purchasing a home is right for you, click here to read more about the advantages of buying vs. renting.
Step 6: Get a Home Inspection and Appraisal
Mortgage lenders require an appraisal and some may require two. By knowing the true value of the home from an appraisal, you are protected from overpaying for a property. A home inspection will help you evaluate whether you want the seller to fix anything on the property before closing on the sale. During this time, a title examination is also performed to determine whether any liens (A lien is a claim on residential property for the homeowner’s unpaid bills. When a lien is placed on a home’s title, it means that the owner cannot legally sell, refinance or otherwise transfer clear title of ownership to the home) exist on the property.
Step 7: Get a Loan Decision
When the inspection and appraisal are performed, the mortgage lender will approve or decline the loan. A conditional loan approval is contingent on additional documentation and/or actions. In some cases, a counteroffer may be provided with alternative loan options. At GuardHill, we have access to over 50 investors and lenders which allows us to find the most favorable home financing terms and competitive interest rates for you. Click here to get started!
Step 8: Coordinate a Closing Date
Schedule a closing date to finalize your mortgage. You will arrive at the specified closing location to review and sign all loan documents. Your mortgage lender will thoroughly explain all documents to you, ensuring that you understand exactly what you are signing and the terms you are agreeing to. The funds for your loan will then be wired to the closing agent. You may need to set up a new escrow account to pay property taxes and homeowners insurance with your mortgage payment. To learn more about your monthly mortgage payment, click here.
Buying a home allows you to take advantage of a wide range of benefits. We are here to help make your dream of homeownership become a reality. Apply online or contact us for more information.