Steps for buying a house?

Question

Should I look at a house first or apply for a loan first? could someone delineate the process for purchasing a house?

Answer 1

Most banks and mortgage lenders will now allow you to fill out various details and "pre-qualify" which allows you to get an accurate picture of how much they are willing to lend a person with your job/background/credit history/etc.

This is a really good idea, because then you'll know how much house THEY think you can afford.

This is free advice from a complete stranger, but: If you buy 75% as much house as they say you can afford, life will be a breeze. You put the other 25% in a "savings type" account each month, and just let it accumulate there, then you never have any 'out-of-pocket' expenses for the inevitable surprise repairs. In the VERY unlikely event you don't have any unexpected house-expenses, you'll have a big chunk of change!

Good luck!

Answer 2

Absolutely get pre-qualified first. That way you will not be looking for too expensive or too cheap of a house.

Secondly if you are currently renting make sure you are fully aware of how to end your rental agreement.

Third - decide if you want to work with a buyers agent or not. In my experience of buying 2 homes the advantages of having a buyers agent was familiarity with my buyers agent - I didn't have to reexplain what I was looking for to a new Realtor each time I looked at a house. The major disadvantage can be that your "buyers" agent is really more of an agent for the seller - they only get paid once you buy something so are constantly pausing you towards a sale.

Fourth - I like to use Realtor.com to research homes in the area I was considering. It is easy to get a general feel for the market by using Realtor.com and to know what is or is not a good deal.

Fifth - Set your budget on how much you will spend. Usually this should be less then the full amount you were pre-approved for, and I would suggest somewhere in the ball park of 80 to 90 percent of what you were approved for if that makes sense financially. My theory is the more you spend up front without breaking the bank the less likely you will be to want to switch homes in a short amount of time and re-incur the closing costs.

Answer 3

Shop around and get pre-approval from a bank or credit-union for your house loan. You might want to avoid mortgage brokers as this has been known to hurt a sales deal - particularly if it's a competitive house.

From there, you have two choices to make - New Home or Existing Home, Realtor or Not?

For New Homes - do your research. Google the builder, search the local papers for any articles about them. (Not all of them are ethical.) You can probably avoid a realtor in this case, since the builders will offer large incentives. Basically, they split the difference with you on the fee they're not paying the realtor.

For Existing Homes - it depends. For a first-time buyer it's probably beneficial to have a Realtor. Do your research, find a good one. Know that as the buyer, you do NOT pay, the seller pays. Any realtor who charges you a fee as a buyer is probably a sham artist. NEVER use the seller's agent - that's a conflict of interest and a reputable realtor won't agree to represent you anyway.

From there, you select the house. You make an offer, in writing.
The buyer can either accept or reject the offer.
Once you have acceptance, both sides ratify the offer and the buyer puts down "earnest money" which can be anywhere up to about 10% of the purchase price, depending on the market and house price.
In most states you have 7 days to complete a home inspection using a professional inspector.
After those 7 days, you're obligated to purchase the home. If you pull out of the contract, you'll lose the earnest money and might get sued for breach of contract.
A settlement date will be negotiated. Buyer and seller must agree on a Title and Settlement Firm - generally a law firm that specializes in Real Estate. They will arrange for the paperwork.

Again, work closely - VERY closely with your bank or credit union. They're on your side. Keep in close communication with the bank and your title company.

Answer 4

NEITHER. First, you should read Dave Ramsey's book The Total Money Makeover www.daveramsey.com

Second, recognize that in the whole house-buying process you are exposing yourself to SALESMEN, and mortgage brokers are salesmen who get paid commission based on the loan amount; realtors are salespeople who get paid based on the sales amount. It gives new meaning to "Into the valley of the shadow..."

Third, you and wife, if any, must sit down and write out a budget; all income and all expenses, with the intent of finding out where you are financially, and then determine what price home you can afford. Dave Ramsey has a formula for both houses and cars, so that you don't get into financial problems.

LENDERS WILL qualify you for more than you can afford, just like credit card companies. So DON'T RELY ON SOMEONE ELSE TO TELL YOU WHAT TO SPEND.

Good Luck

Answer 5

Get your loan first. Spend some time in preparing a list of what you require in a property. Check listings on the Internet or local papers. Arrange to view properties. When property is found arrange to have a lawyer or conveyancer to take care of purchase. You or lawyer/conveyancer can arrange for building, electrical inspections. Don't be swayed by what the pushy real estate agents tell you. Be guided by the lawyer or conveyancer. (Conveyancers are usually cheaper)

Answer 6

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