How to Navigate the Homebuying Process
Create a budget and determine what is affordable
- Buyers can generally afford a home that is between two and three times their gross income. They shouldn’t spend more than 30 percent of their monthly income on housing.
- Consider down payments, qualifying for loans and closing costs
- The amount you save for a down payment will depend on your loan type
- If possible, save around 20 percent of the purchase price for a down payment – the higher the down payment, the lower the mortgage’s interest expense, including no PMI
- Remember additional expenses
- Property taxes, insurance, maintenance and utilities
- Regular home maintenance or unexpected repairs
- Taxes, attorney’s fees, credit report, home inspection and transfer fees
- Possible contingencies
- Fees from third parties and services for appraisal, surveys and inspections
Research and prioritize important features
- Create list of needs and wants based on what you can realistically afford. Consider:
- Location, amenities, proximity to work and schools
- Estimated long term/future resale market prices
- Using SABOR.com to search what is on the market
Get pre-approved by lenders
- Pre-approval shows what you can afford based on budgets and makes offers more attractive to sellers; this also allows you to know how much home you can afford before you start looking
- Check credit reports – make sure all problems are addressed
Close the deal
- Determine a strong offer amount, but be open to negotiations
- Work with your REALTOR® to prepare written offers/contracts, manage expectations and handle negotiations
- Understand the contracts
- A real estate transaction brings many notice, disclosure, contract and application forms – get clarification from your REALTOR®
- Arrange for financing
- Act fast in tight markets
Remember to ask questions, work closely with and rely on your REALTOR®