8 Steps to Successful Home Ownership
1. Home Buyer Education. This should be the first step prior to making any large financial expenditure, and especially, home ownership. So get educated. Register for our in-person Home Stretch class for those who live in the twin cities area of Minnesota or the FRAMEWORK online e-learning course.
2. Buy First Home Right. What a mortgage lender says you can borrow may not be affordable for you. What’s the difference between being approved for a mortgage loan amount and personal affordability? The difference is understanding how, where and on what you spend your money; your personal and financial goals; and your comfort level with a certain monthly housing expenditure. A household budget that incorporates future goals is critical and absolutely necessary to this determination. There are a lot of budgeting tools available that can help with this step.
3. Shop for a Mortgage Loan. Contrary to popular belief, this is not the first step toward successful first time home ownership. Accomplishing Steps 1 and 2 above, then visiting with many mortgage lenders (both loan officers and brokers) is the best way to get a good idea of the various mortgage loan programs that may be available to you. For first time home buyers, there are down payment and closing cost assistance programs available to help cash strapped home buyers.
4. Shop for a First Home. Do your homework first. In other words, know how much you can afford to spend (Step 2) and how much you are approved to spend (Step 3). It’s always a good idea to determine what’s important to you in a home. For example, all these factors are important considerations in purchasing a home: location, single family or condo, floor plan, and/or the school(s) you want your children to attend. Additionally, these and other considerations effect your choice of real estate professional which should be based on your needs and wants.
5. Negotiate a Purchase Agreement. Your real estate professional will also help you with this step. However, you need to be familiar with the purchase agreement document. It is a written offer to purchase a home under certain terms and conditions and, if approved by the seller, becomes a contract with legal consequences. Negotiations regarding purchase price and other conditions are often involved. As one of my law professors was fond of saying, it’s easy to get into things, and often difficult to get out. So know your responsibilities under the contract.
6. Obtain a Home Inspection. A professional home inspection by a licensed home inspector helps you identify unseen physical problems that may or may not cause you to have second thoughts about purchasing the home. This is where you as a buyer should adhere to the saying “buyer beware.” A home inspector will help you became aware of what you should know about the home before you buy it.
7. Finalize Mortgage Loan Application. Go back to your selected mortgage lender and provide them with the purchase agreement. They will order an appraisal of the property to make sure it is worth the amount of the loan. The terms of the loan will be finalized and you will be given a set of instructions on how to stay qualified for the loan. A multitude of small changes in your financial situation could cause you to no longer be qualified for the loan. Talk with your mortgage lender when in doubt regarding any planned financial activity.
8. Close on Mortgage Loan. This is the meeting where transfer of the property from the seller to you will occur. You may want to exercise your writing hand prior to the meeting, because you will be signing a lot of documents. After you sign, you own the home so be prepared to claim your new home. Congratulations, you are a first time home buyer.
There are many nuances and considerations to each step of the home buying process. So get educated with Home Stretch or FRAMEWORK.