Guide to Buying Your First Home
1. Organize Your Finances
The first step to buying your home is to establish how much money you will need to have saved and what you can comfortably afford to borrow. Buying a house can be expensive. It is important that you have saved up enough beforehand to cover your costs. You will need to pay a deposit for the house, legal fees, title fees, survey fees, moving costs, plus the purchase of any furnishings you may need for your new home.
Before you can start house hunting, you will need to find out how much you can comfortably afford to borrow and pay back each month. Our Mortgage payment calculator will help you. The lender will need confirmation of your income, so they will ask you to bring your last three months' pay check stubs and last year's Tax information. If you are self-employed, you will be asked for your business accounts for the previous three years. The lender will also need proof of your identity and, if you are not registered with the voter's registration at your current address, they will need to see proof of your residency, such as a recent bank statement or utility bill.
The lender will complete a full review of your current income and expenditure. This will help them determine how much to lend you based on the payments you can afford to make.
After being approved for a loan, a mortgage adviser from the lender's company will recommend which of their mortgages will best suit your needs and circumstances. To do this, he or she will spend some time discussing with you your current and future requirements. You will be given a full mortgage illustration providing information about the mortgage recommended, the monthly repayment costs and any other associated charges and terms.
2. Start House Hunting
Now that you know how much you can afford to spend on buying your home, you can start house hunting. Contact a Realtor, check local newspaper and websites for details of properties for sale within your price range. Visit as many properties as you can and don't be afraid to go back for a second look or to visit at different times of day. Draw up a checklist before you visit and take a camera with you. Take notes during the visit. It is very difficult to remember all the good Points (and some of the not so good ones), once you have left. This way you can draw comparisons between the properties that you see.
3. Make an Offer
When you have found the property you want, the next step is to make an offer. First, establish whether the price includes carpets, curtains, light fittings, garden ornaments and such items; if not, you may want to ask the seller to make a list of items to be sold separately.
To make your offer, tell the real estate agent that you wish to buy the house and how much you are prepared to pay. If the seller does not accept your offer, further negotiations may occur, or you may decide to choose a different house.
When your offer is accepted, you will receive written confirmation from the real estate agent. You are not legally committed to buying the house at this stage and there is still a long way to go.
4. Arrange Your Mortgage
Now that you have chosen your property and agreed a price, you should make another appointment with your mortgage adviser and arrange for your loan application to get underway.
The mortgage adviser will go over the illustration previously provided and answer any questions you have. He or she will then help you to complete a confidential questionnaire about your income, other financial commitments and the property you wish to buy.
At the end of the meeting, the mortgage adviser will be able to confirm if your mortgage has been agreed 'in principle' subject to final checks. They will then need to carry out a property appraisal and complete any further checks on your income and Credit status before a formal approval can be given. The mortgage adviser will be happy to keep you up to date during this process.
5. Real Estate Appraisal and Home Inspection
Before the Lender can agree to your Mortgage, they will obtain a property appraisal, which will help them to decide whether and how much to lend on the property. You will be given a copy of the appraiser's report, but it may not provide sufficient information to help you to decide to go ahead with the purchase.
For your benefit, you may want to consult further with a home inspector. A home inspection is important in analyzing the condition of such things as the electrical wiring, or to investigate the extent of any suspected dampness/water damage.
6. Mortgage Offer
When the lender has completed all of the checks and everything is satisfactory, they will send you a 'mortgage offer' which is a formal document confirming that your mortgage loan has been agreed. The mortgage offer includes a full illustration of mortgage costs and terms. A copy will be sent directly to your real estate agent who will then be able to finalize the purchase on your behalf.
7. Exchange of Contracts
When your real estate agent has completed various inquiries about the property, such as checking the seller's Title and examining the contract, and is happy with the mortgage offer, you will be ready to 'exchange contracts'. Your real estate agent will ask you to sign the contract and pay the deposit. Your signed contract will then be sent to the seller's real estate agent, who in exchange will send back an identical contract signed by the seller. This is the 'exchange of contracts' that legally binds you to purchase the property. If you pull out at this stage you would lose your deposit. Once contracts are exchanged, a date for completion of the purchase can be agreed.
Your Lender will require that you have home owners insurance for the property and that the policy is in place from exchange of contracts.
9. Preparing To Move In
With the completion date agreed, you can now obtain quotes from moving companies. Don't forget to inform the gas, water, electricity, and telephone companies of the change in ownership. Arrangement should be made for meters to be read and services reconnected.
10. Payment of Closing Costs
Shortly before the completion date, your real estate agent will ask you to sign the final documents, and will request the Mortgage loan money from your lender. You will then be asked to pay the balance, legal fees, and any other Closing Costs.
Once all of the formalities have been completed you can collect the keys and move into your new home, joining the thousands of others who are enjoying the benefits of home ownership.