Buying a house is not as simple as finding a house you want to buy. Belair-Edison Neighborhoods is here to make the homebuying process easier. These ten steps will walk you through the process from education to home selection to settlement and beyond. Step 1: Education - Become informed about the process of buying a home and decide whether homeownership is right for you. It is important that you get your education from someone who does not have an interest in your purchase such as a nonprofit housing counseling like Belair-Edison Neighborhoods, Inc.
Step 2: Housing Counseling - Homeownership Workshops provide an overview of the homebuying and mortgage process.
- At one-on-one sessions, a counselor will talk to you about your budget, credit history, and what you can afford. He/she can also help you solve any problems that may prevent you from buying a home.
- When you have completed housing counseling, you will get a Home Buyer's Education Certificate. Many of the city, state, federal, and employer incentive programs will require this certificate before you put a contract on a house.
Step 3: Credit Review - In order to buy a home, you should have good credit. Good credit shows that the lender that you will pay your monthly housing payments. You can get a free copy of your credit report once a year. Your housing counselor can help you get your credit report, but sometimes there is a small fee.
- If you have no credit or have some credit problems, your housing counselor can instruct you on how to improve your credit.
Step 4: Pre-Qualification - A housing counselor will help you figure out how much you can afford to spend on a house and find a mortgage product (a type of loan) that works for you.
- Before you start looking at houses, you should get a good faith estimate from a lender, so that your realtor will know what price range is right for you.
- It is important to complete steps 1-4 before you begin house hunting. You will not be eligible for certain types of loans if you put an offer on a house before you complete housing counseling.
Step 5: Home Selection - Now, you are ready to look at houses. If you have not chosen a realtor, your housing counselor can help you find a good realtor to show you homes that fit your needs and within your budget.
Step 6: The Contract - After finding the right house, you will make a written offer to buy this house. The contract is a legally binding contract, so you must understand everything that is in the contract.
- The contract should be made contingent on the buyer securing financing and on the results of the home inspection.
Step 7: Financing - After you and the seller agree on the terms of the contract, you will need to formally apply for a mortgage. Your housing counselor can help you do this.
- The mortgage lender (the company or organization who will give you your home loan), a representative of the mortgage lender, or your housing counselor will help you arrange for an appraisal of the property you want to buy.
- A mortgage is also a legally binding contract, so you must understand everything that is included in your mortgage.
Step 8: Home Inspection - Your housing counselor will help you find a home inspector who will be fair and honest. Be wary of using a realtor's or mortgage lender's redommendation.
- It is the home inspector's job to find out what repairs, if any, need to be made to the home you are buying.
- The buyer and the seller will then have to agree who will make the necessary repairs. Your housing counselor and/or real estate agent can help you determine a fair arrangement.
- You will also need to get a termite inspection.
Step 9: Closing - Before closing (finishing the deal), you will want to walk through the house to make sure that the home is in the condition that you and the seller agreed upon.
- You will also need to get homeowners insurance.
- At closing (also called settlement), you will pay closing costs (fees, taxes, and other incidental costs), sign papers saying you agree to pay for the home, and get the deed and keys to your new home.
- Once everything is signed, you are legally responsible for your home and mortgage. Congratulations, you are now a homeowner!
Step 10: Post-Purchase Counseling - It is a good idea to meet with your housing counselor again to go over you budget and talk about home maintenance and repairs.
- If, for any reason, your monthly mortgage payment will be late or if you are having problems that might affect your financial situation, call your housing counselor right away. He/she can help you with any problems that might jeopardize your ability to keep your home.
There are many responsibilities associated with owning your own home. Make sure that you take the following things into account when planning for homeownership: - Mortgage Payments
They are due on the 1st of the month. There is a grace period until the 15th, but they are still due on the 1st. Payment must be received and credited by your lender by the 15th of the month.
Late charges range from 3-5%.
Consistent and timely payment is crucial. Your mortgage performance can directly effect your future ability to obtain credit. - Utilities
The cost of fuel, oil, gas, electricity, water, and telephone can add up. - Maintenance
Routine home maintenance (painting, etc.) will be a continuous expense that will save money in the long run.
The cost of routine maintenance will be more for older homes than for newer ones.
Plan ahead for major repairs like a new furnace, roof, or hot water heater. - Preserving Assets before and after Closing
The need for cash assets is greatest immediately after closing.
Resist the temptation to spend too much too soon on decorating and new furniture.
Purchase the necessities first like a lawn mower, hand tools, and basic furniture.
Stay on top of your budget and avoid accumulating additional debt beyond your mortgage payment. - Monthly Budget
Your monthly budget should reflect your monthly take home pay minus the mortgage payment, utilities, telephone, credit card or other loan payments, auto and/or life insurance, food, and estimated clothing and medical expenses.
|
