But its not impossible.
Well walk you through the process of buying a house step by step.
Think youre ready to embark on your home buying quest?
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Heres how to buy a house in nine simple steps.
Whip Your Credit Score Into Shape
A strongcredit scoreis crucial to securing a low interest rate on your mortgage.
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At a minimum, your credit score should be 620.
An above-average credit score falls within the 680 to 740 range.
Anything above 740 will secure you thebest interest rates available.
If you have poor credit, dont rush to buy a house just yet.
Lenders look for a debt-to-income ratio of 43% or lower.
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2.
The age-old wisdom is that you should probably save 20% for a down payment.
And in 2022, most first-time homebuyers do not have that kind of cash lying around.
There are benefits to putting 20% down, however.
When you put 20% down, you usually avoid having to carryprivate mortgage insurance, or PMI.
VA loans do not require PMI even if you put 0% down.
A larger down payment can also make your offer more attractive in a competitive market.
Get Preapproved for a Mortgage
Before shopping for houses, you should shop for a lender.
you’re free to compare mortgage rates online and interview prospective lenders to find the best deal.
Then ask that lender for apreapproval letter.
This is different from being prequalified.
to an underwriter for verification.
A lender may preapprove you for a higher amount than youve budgeted for.
Ask family members and friends for recommendations on real estate agents, and always hire a buyers agent.
Shop for Your Dream Home
This is the most exciting step.
Now it’s possible for you to actually set foot inside of homes and envision your life inside them.
But dont be distracted by fresh paint and that hot tub in the backyard.
When youre house hunting, have a sharp eye for what really matters.
If possible, bring along friends or family who know what to look for in a new house.
Cosmetic things like ugly carpet and questionable wallpaper can be changed relatively cheaply.
The structural components are what you should be most concerned with.
Some questions to think about when you tour a home:
7.
Be prepared to negotiate the purchase price, especially if you envision needing to do some remodeling.
The seller may make a counteroffer.
you could counteroffer right back until you land on a contract that you both find pleasing.
Youll get this money back if the sale falls through because of issues with the appraisal or home inspection.
If you purchase the home, the money is applied to the price of the home.
It is your responsibility to coordinate thehome inspection.
Though not always legally required, a home inspection is something you should absolutely do.
The average home inspection costs between $300 and $400.
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1.
Plus they probably wont cost you a dime as the buyer.
However, those estimates assume your credit report is immaculate and you are putting 20% down.
Plus theres homeowners insurance, PMI, property taxes and, of course, interest.
Youll be paying out of pocket, and the seller is not liable.
Remember: You are likely signing a 15- to 30-year commitment.
Make it a number youre comfortable with.
Timothy Moore is a freelance writer for The Penny Hoarder.
Senior writer Robert Bruce contributed to this article.
(Can you sense my millennial sarcasm there?)
You know which ones were talking about: rent, utilities, cell phone bill, insurance, groceries…
