Buying a second house? This guide will teach you about the important financial considerations you need to think about.
When it comes to house-hunting, the road is long and involves so much more than just scoping out the local listings for the most beautiful homes. To make the journey as easy as possible, there are countless variables to consider. Whether you want to change your lifestyle or your financial situation is allowing you to afford more house, there are steps to buying a home that everyone should follow. They may not be glamorous, but they are essential. When it comes to homeownership, “winging it” is simply not an option.
For the best results, prepare to do some research before you even start reaching out to agents. There are things you’ll want to know before you embark on this journey. Relying on your own research, along with the trusted advice of your real estate agent can help ease some of the uneasiness that is sure to accompany such a huge decision.
Steps to Buying a Home That Will Make it a Little Less Scary
Step 1: Print your credit report (for free)
First thing’s first–you need to check your credit. This will keep you ahead of the game when contacting lenders and give you an idea of how high (or low) your interest rate will be. As you begin meeting with lenders and they pull your financial information, you’ll be able to spot any errors in their reporting early on.
Typically, a FICO score of 620 or above is needed for a conventional loan and some even require that score for an FHA loan. Lenders typically reserve the lowest interest rates for people with a credit score of 760 or above. The higher your credit score, and the longer you’ve been building credit, the better your chances will be of getting a great loan with a low interest rate. Websites like creditkarma.com and annualcreditreport.com are just a few resources where you can access your credit score, free of charge.
Step 2: Get real about your finances
You might already have your eye on a mansion, and that’s great! But remember to be realistic with yourself about your budget. Don’t forget to account for the unexpected when deciding on a reasonable mortgage payment. Never splurge on a home you can’t afford if it will put you at risk of financial instability.
To ensure you’re staying within your range, take advantage of resources like Zillow’s mortgage affordability calculator. This is a great resource for setting a budget for yourself. When you have that number in mind, you can start researching homes within your price range. This will save you (and sellers) a lot of time and potential heartache in the end.[Related article: Figuring Out Your Real Estate Budget: 5 Things to Consider]
Step 3: Find your new best friend–your real estate agent
This is one of the most important steps in the home buying process. Your real estate agent is your go-to person when it comes to reading the fine print in house-hunting. As friends and family if they have real estate agents they recommend. Take advantage of social media to see who the agents are in your area, as well as what their past clients are saying about them and how involved they are in the community. You should feel at ease around this person, and make sure they have your best interest in mind.
Great real estate agents invest a significant amount of time and energy into their business. Look for individuals who are going above and beyond to market themselves and get the name into the public eye. And of course, be sure to meet with a few of them too. There’s no right or wrong way to choose an agent. The most important thing is that you feel confident working with them and that they help ease some of these pre-house hunting jitters. Trust your gut. When you know, you know.
Step 4: Let the house-hunting begin
Now for the fun part! Get out in the market and start perusing the listings. You and your agent can come up with a plan to determine what your wants and needs are. Develop a checklist of the things you absolutely cannot live without in your new home. When you’re shopping, this will be a huge help in saving you time and energy fretting over homes that are beautiful, but missing the things you must have.[Related article: The Ultimate House Hunting Checklist]
Since you’ve likely crunched the numbers at this point, it’s also beneficial to look into multiple lenders to see if you can get pre-approved. You don’t have to commit to anything, but this will give you an even clearer idea of what mortgage loan you’ll qualify for. Compare interest rates, fees, and give yourself a little breathing room to negotiate, should the opportunity present itself.
Step 5: Make an offer they can’t refuse
This part can be exciting, and perhaps a bit scary as well. Luckily, your trusted real estate agent will be there to guide you every step of the way. If your real estate agent is experienced and committed, they’ll be well-equipped with the knowledge to help you craft an intelligent offer. Still, there’s always a chance you may not be the highest bidder. It’s normal to get turned down once or twice. Stick within your budget as best you can, and take losses as a sign that something better lies ahead. You don’t have to settle for a home you’re not excited about, you just need a little patience.
Step 6: Don’t stress over home inspections
Often, a home inspection is a necessary step in the adventure of acquiring any home. When your offer is approved, an inspector will take a closer look, spotting any major repairs you may have overlooked. Sometimes there will be unforeseen roadblocks. Ultimately, this is preferable to moving into a home and uncovering thousands of dollars in repairs after everything is signed and set in stone. Trust the process and bring something to help you get stay occupied on inspection day. Bring a notebook and some pens and start planning how you’ll decorate while the inspection is being performed.
Step 7: Cross your t’s and dot your i’s…
Now for the really exciting part: paperwork and moving over your utilities. The paperwork may feel endless, but it’s a crucial part of the journey to owning your dream home. From start to finish, there will be plenty of fine print. Luckily, the last of it will be what really counts: the closing papers.
Before you move in, make sure you put all the utilities in your name, so you won’t be missing any essentials such as heating, internet, cable. At the end of the whole process, you will likely be exhausted. But you’ll also be one step closer to the most exciting part–getting to finally move into your new home!
Step 8: Start planning the housewarming party
If you’ve come this far, now is the time to breathe a huge sigh of relief. It may not happen immediately, but usually, within a few days or weeks of closing, you’ll be ready to move in. Keys in hand, all that’s left to do is pack up the moving vehicles and start the next chapter of your life. And don’t forget to give yourself (and your real estate agent) a pat on the back for a job well done. After all, you just survived all eight steps of buying a home. Invite some friends over and get ready to welcome years of memories in a home you can officially call your own. Now is the time to really celebrate. You’re a homeowner!
Are you ready to start the process of buying a home in Kansas City? Let our team help guide you through the process, from house hunting to negotiating closing costs. Give us a call today! You can reach us at 913.521.8806. Visit us in person at 5000 W. 135th St. Leawood, KS 66224.