How to Buy a House and the Cost of Buying a House
For most people, buying a house can be the first step in creating generational wealth.
Others buy a house to escape the jaws of increased rent.
The truth is, there is much more freedom in owning your own house. You can do a lot of things if you own your own house.
Homeownership is thus the ultimate goal for many people as they view it as a way of solidifying their financial assets.
There are those who will opt to buy a home while they are young, while others wait and buy closer to their retirement.
So what does buying a house involve. What are the steps involved when you buy a house?
Understanding the Language used in Buying a House
What one should understand is that buying a house can be a tricky affair.
Buying a house is not a direct situation where you ask for the price and nod your head and pay the money.
Potential homebuyers must first learn the language and concepts involved in buying a house so they make informed decisions along the way.
There are few concepts that you must first learn and understand before you get yourself involved in the process of buying a house and becoming a homeowner.
Grasping these concepts will also help you have bargaining power so that you can spend an acceptable amount to buy your dream home.
Here are the concepts you need to know when you buy a house:
1. Make sure the time is right
If you have decided to become a homeowner, then make sure the time is right. This means having all that is required in the process of buying a house.
Most importantly, make sure that your finances are in order.
If you are struggling with loads of debts, it will be impossible for you to buy and maintain your dream home.
2. Know how you’re going to pay
Once you decide you are going to buy a house try and ask yourself this very important question: how are you going to pay?
For most people, the only option available to raise funds for the down payment and transfer costs is through savings.
Next you will have to determine just how good your credit score is. This is what mortgage lenders will look at in order to approve your mortgage.
You should also check with mortgage lenders to see what interest rates they are willing to charge?
The best way to do this is by applying for a mortgage pre-approval. This will help you gauge your credit score and affordability levels.
3. Calculate closing costs and other legal costs
In answering the question above, you will need to calculate all the once-off payments such as closing costs and transferring costs.
Beyond these costs you will need to budget for the monthly mortgage repayments.
The fees charged by property transferring attorneys takes up another huge percentage of the buying costs. Make sure that you research and budget for these costs in advance.
As such, make sure you calculate the final figure that you will have paid before moving into your new house. If it is affordable and worth it to you, then you are good to go.
4. Budget for home inspection and appraisal fees
Before buying a house, it is a requirement that you pay for the appraisal and home inspection fees. You will also be required to pay for pest inspection.
These services will safeguard you from buying a defective home or from paying too much than necessary.
5. Factor in taxes and insurance costs
As a homeowner, you will be expected to pay taxes and home insurance, depending on the state you are in.
It is your job therefore to factor in what you will be expected to pay and weigh the costs before making your purchase.
6. Maintenance costs
It is important you check if the home you are about to buy requires any significant maintenance.
If any maintenance is required, you must try to work out the total estimated cost thereof. Will you be able to foot the cost?
After considering these points, you can be in a position to make a solid judgement and be able to pay the right price to buy for your new dream home.
7. Choose a good neighborhood
Now that you have worked out the finances of buying a house, it is time to shop around.
When shopping around to buy a house try and give yourself enough time.
Make a list of all the potential neighborhoods you prefer. If you’re not sure, ask around and talk to people about safety and security issues in their neighborhoods.
Make sure to also take drive at different times to visit each of your shortlisted neighborhoods.
Go there in the evening, on weekends and even during peak traffic hours. This will give you a better sense of each neighborhood.
Another good thing to do at this stage is to use the internet to browse for property listings in those neighborhoods.
Browsing through houses for sale in your selected area will help you get an idea of current property values in those areas.
8. Find an experienced real estate broker
An experienced broker will guide you through the entire process of buying a house and beyond.
Brokers will also advise you of new properties that are becoming available even before they are listed.
Brokers are paid through a commission that is levied on the sale amount when you buy a house. The Broker’s commission is usually around 5 to 6% of the transaction amount.
9. Make an offer and get the mortgage approved
Once the broker has assisted you in finding a suitable home you will now need to make an offer to purchase.
Here the broker will take you through a standard offer to purchase documents that must be signed by you and the seller.
The seller will be presented with every offer that you make and is expected to either accept or reject your offer.
In some cases there will be other offers made by other interested buyers for the same property. In this case you will be expected to outbid the other offers for your offer to be accepted.
Once your offer is accepted, the signed offer becomes a contract document and will now be subject to a mortgage approval by your mortgage lender.
If your mortgage is approved the transferring attorneys can now take over the legal processes of registering your mortgage and doing a deed registration.
10. Close the sale
During closing, all the parties involved will sign the paperwork needed to finalize the purchase.
After this, it will now take a few more days for your mortgage loan to be paid out by your lender to the seller.
Once the seller receives the check it’s over, you can now move into your new house.
All the above steps of buying a house are necessary for you to complete in order to buy a house, move in and enjoy all the benefits of being a homeowner.