While some of the steps involved in a home buying transaction may vary from area to area, many steps are standard. Purchasing a home is a huge financial decision, so it’s normal in case you feel a little intimidated, as you want to make sure you take all the right steps.
Taking time to gain a better understanding of the steps involved in a real estate purchase will help you feel more confident during your house hunt, and will allow you to make the best, well-informed decisions.
If you’re in the market for homes for sale in South Orange County, we’ll take a look at key steps in the home buying process and offer a few helpful tips for buying a house along the way.
Review Your Finances
Your credit reports serve as a record of how well you’re able to manage your current finances. They reflect your financial history, which is why understanding what these records show is important before trying to apply for a mortgage. Along with your credit score, these reports will play a significant role in the approval process, and will be used as a basis for lenders to determine your interest rate and other loan terms.
When reviewing your credit reports, there’s a chance you could encounter a few unexpected details, as errors can be pretty common. Ideally, you want to avoid making any late payments, as these will show up in your credit report. A single late payment will have a negative impact, but having several will really put you at a disadvantage.
You’ll be able to request for one free credit report every year. Take time to go through your report and check your credit score as well. Doing this during the early stages of the process will give you time to fix any issues and improve your score if necessary.
Work with an Experienced Real Estate Agent
Real estate agents have in-depth knowledge of the local market, representing home buyers, sellers, or both. A real estate agent will be able to make the entire process smoother, as they’ll be able to provide a selection of listings that match your requirements, negotiate on your behalf, handle the paperwork, and help you avoid potential pitfalls along the way.
Familiarize Yourself with the Mortgage Industry
Searching for the right loan and lender is a key step in the home buying process. While figuring out which lender to work with will depend on your specific goals, gathering more information on the loan process is a smart move before you actually get in touch with a lender.
Look into how debt-to-income ratio works, and why it plays a significant role in the loan process. Read about discount points, so you can figure out whether or not you might need them.
In addition, consider asking your agent for referrals – they might be able to help you find one that matches all of your requirements.
Getting preapproved for a loan helps you determine how much you can afford, so you don’t have to waste time considering options only to find out they’re out of your budget.
Preapproval brings other benefits to the table as well. In case a home you’d like to purchase receives offers from other prospective buyers, having a letter of preapproval from the bank attached with your offer will give it an edge over the other offers, giving it a much better chance of being accepted.
Evaluate Your Requirements and Preferences
Buying a property isn’t as challenging as it seems when you’re more familiar with the real estate market. Before you start searching for available homes, narrowing down your specific wants and needs can be extremely helpful, as you’ll be able to differentiate between homes. Try to be flexible when it comes to wants, but don’t have too much leeway with your needs in order to find the right home.
Additionally, do not discount the possibility of an eventual resale. Always keep in mind how likely it will be for the property to hold its value, and be on the lookout for ones that have a great chance of appreciating down the line.
Starting Your Home Search
You have plenty of options when you want to see what’s available. You can rely on your real estate agent to find listings, or you can look for available properties yourself by picking up “homes for sale” magazines, looking at classified ads, or searching online. You can also consider driving around neighborhoods to search for homes with a “for sale” sign in the yard.
All of these are great ways for you gather options and see what homes can accommodate your budget.