How Do I buy a House?
Figure out the Money.
You will need to have a plan on how to afford the house before you begin looking for one. Here are the usual options:
- FHA Loan-This is most popular for first time home buyers. It requires very little down, usually 3.5%, and sometimes, with Bond programs, no money down other than appraisal and earnest money ($1,000 to $1,500). The house has to meet certain standards in order to be able to use this type of funding. That means no "As Is" Sales. It also means you can not always use this type of funding on mobile homes or condominiums. This must be used on your primary residence.
- VA Loan-Must be VA eligible as determined by the Department of Veterans Affairs. There is a VA funding fee that usually is added to the amount of the loan. That fee is about 2.15%. This is a Zero Down loan. You still have the earnest money and appraisal. This must be used on your primary residence and the property has similar standards to the FHA loan.
- Conventional Loan-This can require anywhere from 5% to 20% down payment. These loans can be used on most houses. These are popular to use on "As Is' Properties as well as mobile homes and condos. Another popular use of this loan is for second homes.
- Bank Loans-If none of these work for you, talk to your bank and see what they can work out. Sometimes they can put a lien on your assets to pay for your investments. There are many varieties of funding that are open to banks.
- Cash-This is the easiest to use and can save about $5,000 on a $100,000 transaction plus all the interest that you will not have to pay in order to purchase it with cash. There are less closing costs and much less hassle in the closing.
Keep in mind the 3 Things banks like to look for:
- Credit Score 640 and above, some lenders can go as low as 580.
- 2 years or more work history, schooling sometimes counts.
- Debt to Income Ratio: Out of every ten dollars earned no more than $4.50 should be spent on items that you signed for, such as credit cars, rent, and student loans.
When you have made these decisions and worked with your bank/lender to get the funding, they will provide a letter to bring to your agent.
Look for What You Want
This is when you call in your Buyer's Agent and begin the search. Be specific
- What is Your Budget?
- Who is living with you, and how many rooms and bathrooms will they need?
- How many cars?
- What area are you needing?
- Do you need room to entertain, and is entertaining inside or outside or a little of both?
- Who gets to make the major decisions?
- When do you need to be moved into the house, and do you have to break a lease for that to happen or sell a home?
You will work with your agent to scour the town for all the best houses and walk through the top six. Then you will find the very best of the six and make an offer.