Before you purchase a home, there are five key things you’ll need.
First of all, obtaining a pre-approval letter will be essential to your success as a homebuyer. Meeting with a loan officer who will ask you basic questions about your income, credit, and eligibility is the first step in getting a pre-approval letter.
A pre-approval letter is a fantastic thing to attach to any offer. Additionally, a loan officer will be able to help you with other things throughout the home buying process, as well.
Next, while some have moved away from suggesting this tip, I like to recommend putting down earnest money. Earnest money is money put down in good faith to show the seller that you are serious about the purchase. It can also give you a big advantage in multiple offer situations.
The main concern people tend to raise about earnest money is the fear of not getting it back. However, if for some reason the financing falls through or the inspection isn’t satisfactory, you do get this money back. Earnest money can be written into an agreement or contract in a way that ensures it will be refundable.
The third thing you’ll need is to sort out your down payment. In many cases, the more you put down, the better your interest rate will be. Also, in cases where you’re able to put down 20%, you then don’t need to pay for mortgage insurance.
However, paying 20% isn’t necessary. There are many loan programs out there, so it will be important that you find one that works best for your needs.
This is especially important because your down payment isn’t the only money required in the transaction. You will also need money for your closing costs. These closing costs include several different fees associated with buying a home, but the good news is that you can negotiate.
However, this will depend on circumstance. If you are in a multiple offer situation, the seller will feel less of an obligation to negotiate in your favor. Ultimately, your loan officer and agent will be able to help you determine the right way to navigate this situation.
Finally, the fifth thing you’ll need to buy a home is money for the home inspector. This cost will depend on the size of the home and be taken out of pocket.
Keep in mind that if you are dissatisfied with the results of the inspection or with the home itself, you won’t get a refund. However, the hundreds of dollars you will pay for an inspection will be a worthwhile investment to make sure everything is sound with the home before you spend thousands on a purchase.
If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.