How To Buy A House In 3 Easy Steps
In today’s CareerFH episode, I’ll show you how to buy a house in 3 easy steps.
How To Buy A House Step 1 – Financing
That’s right, before even shopping for a house you’ve got to know what you can afford first. When I was in real estate I used to explain to my clients that there’s no point in going looking for houses until they know their budget.
It’s better to know your price range first rather than looking at inventory that’s too expensive.
In order to see what you can afford, you can go speak to your bank or a mortgage broker and ask them for a “mortgage pre-approval” or simply ask them: “I’d like to buy a house but I would like to know what mortgage amount I can qualify for.”
I personally recommend going to see a mortgage broker as their job is to find you financing. They will only get paid a commission if the deal goes through so there’s no upfront money for this service.
To qualify for a mortgage you have to have at least two of the three following: a stable job (meaning at least 2 years), an excellent credit report and/or a large down payment. You can check out your own credit score through any of these three major credit bureaus: Equifax.com, TransUnion.com or Experian.com)
You must have at least two of those three qualifiers. If you don’t have any of them; then I recommend you plan your future by taking the appropriate steps to achieve them, then revisit your mortgage broker when you’re ready. In the mean time you can still rent while you get everything in order.
How To Buy A House Step 2 – House Shopping
Now that you know your price range, it’s time to go house hunting. You can look at properties by yourself on sites like mls.ca in Canada or mls.com in United States. You can also look at classified ads site in the house for sale section. If you’re starting off though, I would recommend you work with a Realtor.
A real estate sale professional’s job is to help you find what you want based on your needs. They are also paid when there’s a purchase so again, no upfront cost on your end.
Simply find a good Realtor and let them know what your pre-approve mortgage amount is or what you’re qualified amount is. Here’s a word of advice; never go for your top qualified amount, really use this number as maximum only.
Ideally, if you can find something comfortable for less it’s better. Don’t fall under the trap that you need a big house right now. Use this as a starter home, build equity and in about five years from your date of purchase you can start looking around if you need to up size because your family’s growing or you simply want a bigger office.
Take the equity you’ve built overtime and apply it as a down payment on your new house.
Coming back to working with a Realtor, they will also give you advice, educate you and draft your agreements. Make sure at a very minimum that you have these three topics to protect yourself in your offer.
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- Subject to financing.
- Subject to inspection.
- If deal falls through deposit to be refunded.
Tell your Realtor that you want at least those in your offer and they will draft the clause with more details. You’re Realtor will also suggest more clauses depending on the type of property your getting (like: house, condo, town house, lake front, etc).
In this step, this is where you must complete your responsibilities such as confirming your financing (bring your offer to your mortgage broker), hiring an inspector to inspect the property and whatever else needs to be done. Again your Realtor will be guiding you throughout this whole process.
They go through rigorous trainings and constant education updates to make sure they can assist you every step of the way with respect to industry standards. I know, I’ve been there.
How To Buy A House Step 3 – Close The Deal
Once the seller and you have an agreed completed contract with all the conditions waived, it’s time to complete the transaction. For this, you’ll need to bring your offer to your lawyer or have your Realtor fax it or email it to your lawyer.
Over there, your lawyer will make final checks to make sure everything is okay such as land title checks, transfer the funds from one bank to another, registers and records the deed and also transfers the house keys in your hands.
Other Valuable Info You Need To Know On How To Buy A House
You need upfront cash for your security deposit. Usually $500 or $1,000 held in escrow will do the trick. This is in step two, your Realtor will give you further advice on it. You also have to pay for your inspection services which is about $500 and finally you have to pay your lawyer up front and that can be around $2,000.
How To buy A House Conclusion
As you can see, figuring out how to buy a house is not that difficult when you break it down in simple steps. Keep in mind that you’re not doing everything by yourself. You’re using the assistance of professionals to guide and help you throughout the whole process. They are in the business of customer service and you are the customer. These professionals are working for you and not the other way around. Always remember that! So don’t be shy and ask them questions.
What about you, how does my “How To Buy A House In 3 Easy Steps” article helps you better understand the whole process?
