Can I buy?

 

If you can’t qualify to purchase a home, then make a plan to get on the right track financially in order to purchase down the road. What qualifies you to purchase a home? Generally, you need at least a 580 credit score and some cash to purchase a home. A 620 credit score is more preferable and will give you more options, but there are programs designed to work for you if you have a 580 or above. There are programs that can help you with your down payment, but generally, you will need to put down 3.5-5% of the purchase price of the house.

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You also have to pay some lovely closing costs, such as attorney fees, appraisal, lender fees and prepaids. What are prepaids? These are costs that you pay up front when you purchase a home, like a year of homeowner’s insurance and a few months of property taxes. Yes, you do have to pay taxes for owning a piece of real estate with a house on top of it. If you’re getting a loan, then the lender will require that you maintain homeowner’s insurance on the home in case it goes down in flames or gets flooded.

 

And you have to make monthly installments for your property taxes and insurance. These can begin to add up quickly and may add up to more than you make or significantly more than what you pay in rent. You need to speak with a lender to determine not just how much money it will cost you initially to buy a house but also what your monthly payments will be. Check out the helpful contacts section to get some leads on loan originators that can help you out.

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Steps to Buying a House:

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1. Find a lender and get preapproved.

   You’ve made up your mind that you want to purchase a home. The first thing you should do is see what’s on the market, right? Wrong! The very first step is to get verification from a lender that you are ready and able to purchase a house. A lender will look at your financial portfolio, such as DTI (debt-to-income ratio), tax returns, W2’s, 1099’s, car loans, credit card debt, student loans and/or whatever is necessary to determine your creditability to purchase. They will tell you the dollar amount they will lend you in order to purchase a home. Most sellers will insist that they see a preapproval letter to consider your offer so it truly is the beginning point in your search.

2. Narrow your search.

   Think about what you really need and want in a home. Separate what is beneficial for you and your family or other parties that will reside in the home and what is an added bonus. You may need 3 bedrooms and 2 full bathrooms and a fenced yard for little Fluffy. You may want granite counter tops, hardwood floors and a fireplace to go with the 3 bedrooms, 2 full baths and fenced yard for little Fluffy, but that may put you out of the price range you qualify for. You may want to live in the most popular area of town that provides the most convenience for you but the cost per square foot in that area may limit you to a 2 bed, 1 bath house, which is not what you need. Determine what you really need as a starting point. If there are homes on the market with your wants than consider it an added bonus.

3. Find a real estate professional that you are comfortable working with.

   You should be able to obtain all the information you need for this step from me in the “Are we a good fit” section and through the interview questions. You may want to ask similar questions of other agents that you are considering working with. You will be spending a lot of time with the agent so make sure it is someone you enjoy working and it is someone you trust to do their best to protect your interests.

4. Further narrow the list of homes that will work and look at them.

   Now that you have an agent, spend some time going over the type of house and all the specifics you need and want. It’s important to narrowly define the location you desire, based on zip code, school district, convenience to work, church, family or friends. Many buyers will change their preferences because they can’t find the home they want in the area they need, only to regret the decision later. If at all possible, search for something by location and housing needs. Stick to what you need and don’t lose focus. It’s easy to get pulled in to other ideas after watching the latest reality television house hunting show. Remember that Madison County is not the same as place as other areas and you have not have the same selection as friends and family in other cities and states.

5. Submit an offer and negotiate terms.

   Your agent should present any offer you want to make to the seller. Everything is negotiable – purchase price, closing costs, date of closing, inspection requirements, etc. It may take some back and forth to settle on the final numbers so be prepared to negotiate. Your agent should provide you with an Estimated Closing Statement, which will give you a good estimate of what you will owe at closing and what your estimated monthly payments will be.

6. Obtain necessary inspections.

   Under almost all circumstances, you will want to get a home inspection by a qualified professional. A good home inspector will check out and get you a full report of all systems and workings in the home. These include, but are not limited to, plumbing, electrical, structural, appliances, heating and air, windows, roof and crawl space. A report will cost you around $250-450 and is payable upon presentation of the report. If you have any concerns then your agent should submit a Request for Repairs form to the selling agent. From there, both sides will agree on terms. The seller may say no to everything or yes to all requests. They could also bargain with you to complete some of the repairs. Like all else, it is negotiable.

7. Set closing.

   After the contract has been accepted by the buyer and seller, you will meet at an attorney’s office that handles real estate closings. Both sides will sign the appropriate papers and the seller will hand over the keys and garage remotes, etc to you. You will need to bring a certified check made payable to the closing attorney, for the exact amount that you owe (assuming you owe something for closing, which is more than likely). Congratulations, you are now a homeowner!

8. Refer your agent to someone you like.

   If you were satisfied with your agent and want to say thank you, then refer them to a family member, friend, coworker or someone that would make a good client. If the agent enjoyed working with you, then chances are they will also enjoy working with someone you hold in high regard.