Home Purchase – 5 Step Action Plan
Lot of effort and time is consumed while buying a house. Therefore the below 5 steps are given to make the buying process simpler and help you in taking the best decision.
Step 1: Start Your Research Early
You should begin reading Magazines, newspapers, and Web sites which contain real estate listings. Note down the houses you like and check out how long they stay on the market as well as consider the changes in asking prices. This helps you better to know the housing trends in specific areas.
Step 2: Determine How Much House You Can Afford
It is known that buyers look out for houses not more than three to five times their annual household income when they have decided to make a 20% down payment and get a moderate amount of other debt.
Any decision taken should first consider the financial situation. To know how much house you can afford, use our Affordability Calculator.
Discover Bank’s AutoSavers Plan will help you save for your down payment and making it easy to put aside money every month.
Step 3: Get Prequalified and Preapproved for credit for Your Mortgage
You need to know how much you can spend before you begin to search for a home and the easiest way in doing that is getting prequalifies for a mortgage. You will have to give little financial information to your mortgage banker, like your income and the amount of savings and investments you have in order to get prequalified. After reviewing the information, your lender will inform you how much they can lend you. It also informs you about the price range of the homes which you need to consider. You then get preapproved for credit where you have to provide your financial documents (W-2 statements, paycheck stubs, bank account statements, etc.) so your lender can verify your financial status and credit.
Step 4: Find the Right Real Estate Agent
When you purchase or sell a home, real estate agents are important partners. Important information on houses and the neighborhoods which are not easily known by the public is got through these real estate agents. They have valuable knowledge on negotiating skills, the home buying process and familiarity with the area you want to live in. And best part is that they’re compensated from the commission given by the seller of the house so it is free of cost to use an agent.
Step 5: Shop for Your Home and Make an Offer
Begin visiting houses in your price range which helps you take notes (using this helpful checklist) about the houses you visit. It will be difficult to remember every house you visit; therefore you can click pictures or videos to remember.