Buying a house is unlike any other transaction that most people experience in their lives. And, the steps to the whole process can be very intimidating.
If you’re familiar with the steps, however, the home buying process will be a little easier to undertake. Here are the five steps.
| 1: Getting financially ready Avoid taking out any new loans or opening credit cards. Pay off as much of any loans or credit card balances you can, but do not close any accounts if possible. You want to show that many credit providers trust you and that you are in good standing with them and have plenty of unused credit allowances. |
| 2: Pre-qualification Shop around at banks, credit unions and mortgage providers for one you like and get pre-qualified. This will give you a sense of what you can afford. It will also tell you if you need to wait until you save up enough money or get your credit history in a better position. |
| 3: Pre-approval Even better than pre-qualification is pre-approval. Pre-approval means that you have been tentatively approved for a house up to a certain cost and can buy it if the lender agrees that the house meets their criteria for approval. |
| 4: Apply for your mortgage Once you find a house that you want to make an offer on, you will apply for the mortgage loan for it and get your yes or no about whether the lender will approve your loan for the house. At this stage, your qualifications have already been proved — now its a matter of whether the home is fairly priced or overpriced. Lenders will not lend money for a home that costs more than your downpayment and the home value can make up for. |
| 5: Closing The final step in the process involves the seller agreeing to the offer and the mortgage provider paying the seller the amount needed (minus fees). The title company that you or the seller chooses will handle this part of the transaction. This is where everything becomes official. You’re now a homeowner! |
Are you thinking about buying a home?
