The past year has shown us record low interest rates, making many people consider their options for purchasing a home. So what does the process entail, how does it all work, and how long does it take? Here are the steps to buying a single-family home.
If you’re thinking of buying a home but aren’t sure where to start, check out these steps for buying a single-family home:
- Check your credit score
- Get preapproved and create a budget
- Find the right REALTOR®
- Choose the home of your dreams (or one that’s reasonably close)
- Secure financing and purchase insurance
- Head to the closing table
Step #1: Check Your Credit Score
Check your credit score before you start mortgage-shopping. Thanks to the , you’re entitled to one free copy of your credit report each year – and you can get a copy from each of the three major reporting agencies (Equifax, Experian and TransUnion). Consumers can get copies through .
A higher score translates into more competitive interest rates and more favorable terms. Ideally, you want a score of 720 or higher; however, you can be approved for a loan with score as low as 580 (or lower if you’re using a VA loan).
If your score is too low, focus on paying down debt. Avoid opening any new lines of credit and make payments on time.
Pro Tip: You can also sign up for a free credit monitoring service, such as Credit Karma, to keep tabs on your credit score.
Step #2: Get Preapproved and Create a Budget
Getting gives you an accurate idea of how much you can afford to spend on a home. However, you still need to have a budget in mind – and you need to stick to it during your home-search. You don’t have to spend as much as you qualify for.
Your pre-approval letter shows sellers that you’re serious, which is important – especially when you find your dream home and need to make an offer quickly.
Pro Tip: Don’t open new lines of credit or take on new debt after you get preapproval from a lender. Your lender will reexamine your debt-to-income ratio again before closing, and a significant change in your financial picture can cause a lender to change its mind about letting you borrow.
Step #3: Find the Right REALTOR
During the preapproval process, start looking for the right . You can get reviews and recommendations from friends, family and coworkers, as well as read online reviews and meet with potential agents to determine if they are a good match. A knowledgeable, experienced agent will be a valuable asset during this process. Your REALTOR will understand the housing market, help you determine how much a home is worth, negotiate for you and refer you to contractors, attorneys and other professionals who can help you throughout the process.
Step #4: Choose the Home of Your Dreams (or One That’s Reasonably Close)
- and the condition of the rest of the home’s exterior
- Possible problems with the home’s structure
- Noise from neighbors or traffic
- Distance from work, school or other places you frequent
- Water pressure (it’s okay to turn on the shower and faucets!)
As you search for a floor plan you love, you’ll also need to check that the homes you’re interested in are safe, clean and functional. When you find the right house, don’t wait – make an offer right away. Your REALTOR will handle the technical side of making an offer (and the negotiations that follow).
Step #5: Secure Financing and Buy Insurance
Once you make an offer, it’s time to officially submit your mortgage application. Your lender will help walk you through the process. Once your mortgage is approved, you’ll be clear to close on the property.
Before closing day, you need to have proof of homeowners insurance. You can, and should, shop around to find a policy that’s affordable and meets your needs.
Step #6: Head to the Closing Table
After you’ve completed Steps 1 through 5, you can close on your new home. The day before or the morning of closing, you’ll do a final walkthrough to ensure that agreed-upon repairs have been made, the property looks as you expect it to, and that the seller has moved out and cleaned the home. After you sign all the necessary documents, your REALTOR will give you the keys and you can start moving in.
Are You Buying or Selling a Duplex, Triplex or Fourplex in Silicon Valley?
If you’re selling a duplex, triplex or fourplex in Campbell, Cambrian Park, Los Gatos, San Jose, Santa Clara, Saratoga, Willow Glen or another community in Silicon Valley, we’re here to help. Call today or fill out the form below to find out about our innovative marketing plans that can put your investment property in front of all the right buyers.
If you’re also looking for a new multi-family property for sale or another type of home, check out our: