Are you ready to buy a home?

Jim_SamsonBuying a home is one of the biggest events of your life, and one that can have a huge impact on your financial situation for many years to come.

That’s why you need to be 100% sure that you’re ready to make that move and that you know exactly how to do it.

Here’s how to know when you’re ready and what to do about it…

You won’t just wake up one day and realize that you’re ready to buy a home all of a sudden. It simply doesn’t work that way. Preparing for the home-buying process is gradual.

So let me take you through that process so you can know if you’re ready to take that leap…

1. Check your credit

A bad credit score can keep you from getting the financing you need, or it could block you from getting the best interest rates. So get a copy of your scores (there are 3 different credit scores) and figure out if yours is good enough.

If it isn’t, lower that score by practicing some good financial habits over the next months before starting the home-buying process.

2. Get your cash plan

First, set your budget. You can use online calculators to determine this, but knowing the following rule of thumb can’t hurt: All your monthly home payments should not exceed 36% of your gross monthly income.

Then you have to line up the cash. Keep the closing costs in mind and figure out if you’re employer offers any help in this regard. Most lenders like to see a 20% down payment before giving you along.

3. Find a home to buy

My advice is to use an “exclusive buyer agent”, who will be loyal to you. A “regular” real estate agent will technically be working for the seller.

Then search for a home whilst keeping in mind the quality of schools, neighborhoods, etc., as well as the values of other homes in the area. Do your homework.

4. Make the offer

Work with your buyer’s agent to plan out an offer, taking into account the last several similar real estate transactions in the area to give yourself a starting point.

Know what you can afford, but move quickly and don’t over-lowball if you really want the home.

5. Secure a loan

You should have entered a contract upon agreeing to a price with the seller. That contract should allow you to conduct a home inspection, and any good-faith deposit for the contract should go into an escrow account allowing you to get the money back if the deal falls through.

Then contact your lender and secure terms if you haven’t already done so.

6. Close the deal

Make sure you get a quality home inspection before closing the deal. But once everything is approved, you’re free to close!

Your buyers’ agent will be able to help you through the process and keep you updated on what to expect next. And as long as you can complete these steps, you’re ready to buy a home!

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