Some people compare the home selling process with a marathon because they cannot afford, literally and figuratively, to lose time. The explanation is more than simple: if the property spends a great amount of time on the market, the chances of closing a deal soon reduce significantly. Shortly, home sellers engage in a race against the clock. However, in this article we decided to look at the opposite side of the situation and discuss about the process of purchasing a house. Contrary to popular belief, investing in a property is as difficult as or more challenging than selling a property. Most people make the same common mistake, namely to rush into the process without thinking about the consequences of their actions. Indeed, home ownership represents a solid proof that you are a responsible adult capable of financial management and drastic life changes but buying and ultimately owning a property represents a huge commitment meaning that you have to be certain that your financial investment is worth it.
Question everything before deciding to purchase a home
Before making plans and viewing yourself as the happy owner of your dream home, you need to ask yourself a set of questions. First, is this the right time to buy a property? You do not have to purchase a house just because your parents or older relatives advise or encourage you. Furthermore, you do not need to make such an investment just because some people believe that paying rent is like throwing the money away or because of the appeal of low mortgage rates. Buy that house only if you truly wish to become a homeowner. Some people even try to anticipate the ever-changing real estate market, which is almost impossible, especially since you are a beginner and you are not familiar with this field.
Secondly, how will you afford such a massive acquisition? For most people, the best solution is to apply for a considerable loan-a mortgage. Others simply choose to make a 1031 exchange, but this is possible only if you already own a property because it consists in simply swapping an asset for another one similar. Returning to the loan, you cannot get one that easily. You need to meet the lenders requirements, which mainly include having a steady job, good or even excellent credit and enough cash to make a down payment. You probably already realized that we are talking about home financing, which gives you many options but when you are a first time homebuyer things are more complicated. Shortly, a mortgage represents the only variant left in your situation.
Shopping for a mortgage requires great attention
Inevitably, after determining the home financing method, you will have to shop for a mortgage. Remember that getting the right loan is just as important as buying the right house so you should not make the same mistakes that people keep repeating, namely overlooking this step. Just think about it; after receiving the loan, you will have to make monthly payments for years to come. Therefore, you have to be careful when you select the type of loan, check mortgage interest rates and read the repayment terms. Make sure that each of these aspects benefits you before applying for the loan.
…just like shopping for the house
Avoid going home hunting without preparing your finances first because it could lead to a financial crisis. In addition, do not direct your attention towards houses that you could never afford. It is good that you have a multitude of options from which you can choose, but this could also stir problems because you might create a connection with a property that exceeds your financial possibilities. For this reason, you should set realistic expectations before shopping for a house. For instance, do not think that a big house is necessarily better. Moreover, even real estate agents advise not buying the best house on the block. This is because large and imposing homes appeal to a minority, which means that if you plan to re-sell the property sometime in the future, not many people will show their interest. The main idea that you could draw from this paragraph is that when purchasing a house, you should also think of the long-term benefits, not just the short-term advantages.
Submit a serious offer and sign a contract
After you invested time and patience in the home selection process, you have to submit an offer. The smartest move you could do at this point is to discuss with the real estate agent and agree upon a solid offer that the seller cannot refuse. If you are not the only one who plans to purchase the respective home, it means that you are about to enter a bidding war. Do not panic and do not give up. In these types of situations, you must have a positive attitude and show determination. In what regards the purchase agreement, it usually includes information about buyer and seller, purchase price and property address, contingencies like final mortgage approval and home inspection as well as closing date. In some cases, both parties agree on terms quickly because they want the same thing: the seller wants to sell and the buyer wants to buy the same property. However, in other cases one or both of the parties must compromise in order to complete the process.
Do not forget about home inspection and appraisal
If you reached this step, rejoice because you managed to purchase the home of your dreams. Most importantly, you successfully completed the stages required by the stressful and time-consuming house buying process. However, you are not done yet. Do you remember about the contingencies included in the contract? Well, now it is the time to observe that part and fulfill your obligation, which consists in a professional home inspection. The inspection benefits you enormously because it surfaces potential structural issues and necessary repairs that will obviously cost money. If the home comes with major problems, then you can speak with the seller and express your concerns. He has several options: fix those issues, lower the price or opt for contract cancellation. The appraisal refers to the house evaluation and your lender will require it when you apply for the loan.