How To Buy A Home Like You Wash Your Clothes

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So you want to buy a home but you don’t know where to begin or end? As you have already gathered, buying a home is not simple, easy, or quick. In fact, it will take a few posts before I can really break down the essentials of home buying but for today I will try to simplify it to a comparison of your Saturday morning wash day. Maybe it would look something like this…

Step 1: Gather all your dirty clothes. Or in the case of home buying; gather your facts, Research & Budget. Determine how much you can afford, how much do you want to pay per month, how and what amount should you save for the deposit, and what will the mortgage lender require from you. (Hint: lenders usually require proof of recent tax returns, proof of employment, verification of liquid assets, good credit score, good debt to income ratio, etc.) Identify the cities or towns you prefer to live in. The most important decision in home buying is location---your distance to work, family, fun, school, and safety. Budgeting will help you set guidelines for your spending and savings.

Step 2: Sort the clothes by colors. Now, you will sort your facts, Prioritize & Plan. Ask yourself what will take first. I recommend doing the most difficult task first—for me it’s lowering my debt but maybe for you its saving, credit building for the first time, or credit repair. Attacking things piece by piece will keep the process less complicated and less overwhelming. Planning for those priorities will help guide you to your goal.

Step 3: Pretreat the heavy stains. Let’s Repair & Protect our credit. Review your credit report for negative marks and take the biggest marks (that are not due to fall off before your home purchase) under repair—pay down your credit limits to a usage of 33% or less, pay your creditors, remove false claims on your report, ask for a pay to remove debt plan with your creditors. Protect your credit by continuing to make on time payments with your current accounts, limiting the usage of your credit cards, avoiding requests for new credit accounts or loans, and monitor your credit report for suspicious activity.

Pic courtesy of bridalguide.com

Step 4: Find the right washer. Do we need a big machine or small one…is it a big home or small one. Time to Find your Home Style & Preferences. In short, what do you require versus what can you live without in a home. What’s your house style---to name a few there’s Victorian, Cape Cod, rancher, colonial.  Do you want a condo or a single family home? How many bathrooms, bedrooms, and closet/storage space? What appliances or amenities are needed---washer/dryers, pools, fireplaces, basement, wood floors, or private parking?

Step 5: Load the clothes and wash. Time to load the bank. Meet with a lender to Get Preapproved. Getting preapproved lets you know the amount the lender will pay after the home is appraised and the title is presented. Now things are getting started, you have leverage over others who may bid for the home you select and may only have prequalification for the loan or unstable financing.

Step 6: Rinse cycle. Time to rinse out the professionals and Find your Realtor. Maybe you can get someone to recommend a good realtor to you. This person should be knowledgeable in the community you are seeking, well suited for the position based on years of residential selling experience, and available during your schedule to provide services. Find out what is the cancellation policy for open houses or suspending your home search all together. And most importantly what is their commission rate?

Step 7: Final Spin Cycle and remove the clothes. Finally, we found our home; we will perform a home inspection, and Make an Offer. Don’t buy blindly, consider a general home inspection, mold inspection, and flood zone check. If the offer you make to the seller is accepted, we have to close the deal. The closing process involves the completion of legal forms, the official title search, and payment for the title transfer occurs.

You’re probably thinking wow that’s so much information and honestly it is. But keep with us as I break down each step and show you ways to complete each step. And as your knowledge increases things will begin to become clearer to you what the best choices to make are. Feel free to comment or share. We are also on Instagram and Twitter as @practicalwallet!