Decide What You Want
Before you start looking, make a list of what you want and assign each item a priority. Some areas to consider are: location, type of home, and age of the home.
Know What You Can Afford
Most loans require a down payment. If you’re a first-time buyer or fall below certain income thresholds, you may qualify for affordable housing programs. Generally, a higher down payment means better loan terms and a lower interest expense on the mortgage.
Qualifying for a loan: A lender will determine how much they think you can afford based on your income, employment history, assets (e.g., bank account balances, other property, insurance policies, pension funds), and debt.
Your comfort level: You don’t have to spend $500,000 on a home just because the lender says you can afford a $500,000 home. Do some math and determine what you’re comfortable spending.
Make An Offer:
You’ve figured out your home-search criteria and what you can afford. Now find a house and make an offer. Your REALTOR® is an invaluable part of this process. He or she will help you prepare a contract, negotiate, juggle inspections and option periods, and more.
Unless you’re paying cash for the home, you’ll need a loan. Keep in mind the true price of financing goes beyond the interest rate alone. Consider items such as points, total lender fees, loan terms, and penalties for early payment. The lender will likely require an appraisal to verify that the home is worth the cost of the loan as well as a physical survey. Repairs may be required. Insurance must be purchased. All these conditions and others must be satisfied before a transaction can close.
Close the Deal
After weeks or even months of research and decision-making, you close the transaction, usually at the title company’s office. The title agent will ask you to sign documents and will explain each one. You’ll present a cashier’s check or wire transfer funds to the Title company, sign another document that itemizes closing costs (the lender will have given you an estimate in advance), and pay your share of the closing costs. In return, you will receive a deed, transferring ownership rights to you.
This real estate column is brought to you by Kylah Artz, a local real estate agent with Texas Urban Living, serving the DFW area.