Buying a Home in 10 Steps

Introduction:

Find out the process of buying a home in 10 steps. From finding your house and obtaining a mortgage until the closure.

Buying a home can be a long and complicated ordeal. You will probably be making the biggest purchase of your life. It is a process which takes careful consideration because you (and your family) will be making it your home for years to come.

To aid you in this process we will list the most important steps at which you should look carefully.


First tip for buying a home

Do not be naive when it comes to the legal aspects of buying a home. There will be a lot of documents which need to be signed and thorougly read. If in doubt, always contact your lawyer. The terms and conditions can be misleading and incoherent, so if you are unsure of yourself, get some professional aid.

Second tip

Carefully study your financial situation. You can judge your situation by asking yourself the following questions:

Do I have a steady source of income? Have I been employed on a regular basis for the past 2 years? Can I rely on my current income?

Is my credit history sound? Are the bills payed on time each month?

Are there any other longstanding debts which need paying off?

Do I have sufficient funds for a possible down payment?

Will I be able to pay off the mortgage payments each month?

If the answers to the above mentioned questions are negative, it will be hard to find the right mortgage. Try to manage your current situation so you will be able to give more favorable answers (for the lender) to the questions when buying a home.

Third tip

Think about what your ideal house should have. What does it require to fulfil your needs. For example, one bedroom or two (maybe you wish to expand the family). Garden or no garden? Etc.

Fourth tip

Find the right broker. Find a reliable broker with whom you feel comfortable.

Fifth tip for buying a home

Find the right mortgage for you. A mortgage is of course the most important aspect of buying a home. Pay close attention and do your research. Here are the most common mortgages available:


Fixed Rate Mortgages (FRM) - FRMs are still considered the best types of loans available for many people due the simple fixed rate concept. This entails that the interest rate will not fluctuate over time.

Adjustable Rate Mortgage (ARM) – The main difference in regard to the FRM is the fluctuating mortgage rate. This is dependent on outside influences such as the prime interest rate. The main advantage is that the rate can be favorably low at times.

Federal Housing Administration (FHA) – A government-insured mortgage with the following advantages:

- You can put down less cash to qualify under liberal guidelines
- There is no maximum limit on income to qualify

VA loans (Veterans Administration) - VA loans benefit borrowers who are eligible veterans. Liberal qualifying, little or no cash down, relatively high loan amount.

Sixth tip

Find the house you wish to buy. There are several ways of buying a home such as:

Buying a built home. Buy a used home which you feel already caters for your needs.
Build a house.
Manufactured home
Rehab a home (fix up the house)

Seventh tip

Get the home inspected. Before making an offer it is good to get the home inspected by an independant authorized home inspector.

Members of the American Homeowners Association can get a discount.

Eighth tip

Get the house appraised. The lender requires you to do this when buying a home to assure that the amount you loan is not more than the value of the house. For this process it is advantageous to call in the help of an appraiser or your broker.

Ninth tip

Get a homeowners insurance. This is for the benefit of you and the lender when buying a home.

Tenth tip for buying a home

Settlement (closing). The closing is often the most confusing step of buying a home, which can involve several persons, documents which need signing and several fees to pay. However, the settlement procedure may be a lot simpler when you have a better grasp of the process.