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After you apply, your lender will evaluate your credit, assets and income and give you a preapproval letter stating how much you’re approved for. Based on your preapproval letter, your real estate agent can help you find homes within your budget. However, an earnest money deposit is typically 1% – 3% of the purchase price. The money is held in an escrow account and applied to your down payment and closing costs at closing. Your real estate agent will help you decide how much money you want to offer for the house, along with any conditions you want to ask for, like having the buyer pay for your closing costs. Your agent will then present the offer to the seller's agent; the seller will either accept your offer or issue a counteroffer.
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Your list should include basic desires, like neighborhood and size, all the way down to smaller details like bathroom layout and a kitchen that comes with trustworthy appliances. Real estate websites can be a valuable tool for researching properties that satisfy your desires and requirements for your new home. It's up to you to decide which type of property will help you reach those goals. Mortgage credit requirements can vary depending on the type of home loan you’re trying to get.
Obtain a Home Inspection
You can then accept, or continue to go back and forth until you either reach a deal or decide to call it quits. The specific closing costs will depend on your loan type, your lender and where you live. Most homeowners will pay for items like appraisal fees and title insurance. If you take out a government-backed loan, you’ll typically need to pay an insurance premium or funding fee upfront. Your credit score plays a significant role in what loans and interest rates you qualify for. It gives lenders insight into your history of paying your debts on time.
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You may think you can afford a $300,000 place, but lenders may think you're only good for $200,000—depending on factors like how much other debt you have, your monthly income, and how long you've been at your current job. The first thing you'll need to determine is what your long-term goals are. Some folks are simply looking to transform all those "wasted" rent payments into mortgage payments that actually lead to owning something tangible—equity, baby! Others see homeownership as a sign of their independence and enjoy the idea of being their own landlord. Then, there's the issue of thinking of buying a home as an investment. Note that these are just the minimum required scores to qualify for a loan.
Be sure to weigh your options to choose the right down payment for you. A larger down payment may be great, but not if it means emptying your savings. The process typically involves finding a real estate agent, touring houses and getting a loan, but you might be less clear on where to go, who to talk to or in what order you should be doing these steps. To make everything clearer, let’s go through the home buying process and the order in which you should complete the steps.
Attend open houses and home tours
To simplify things, we’ve broken down the steps and created the ultimate homebuying process timeline to help you navigate all the twists and turns along the way. If your home inspector or the appraiser finds fault in the home, you may want to renegotiate your purchase offer. Your real estate agent can help you with this process, which allows you to adjust your offer in light of the findings or cancel the offer altogether. “A mortgage company can help you cover your financial weak points,” shares Dayal from Orchard. “The key here is that a good mortgage provider can help you have the highest chances of affording your dream home while structuring it right for your unique financial situation. A mortgage company can also make your home offer stronger and optimize your buying power,” Dayal explains.
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A contingency is a stipulation included in an offer that states that the buyer is free to break the contract without any repercussions if a particular condition is not met. When considering requirements to buy a house, qualifying for a mortgage is one of the most crucial steps, and you may need a certain credit score to do that. Before you begin the home buying process, you want to make sure you’re actually in a position to take on all that buying a house entails. That’s why the first step is to check your credit score and review your finances.
Many home buyers believe they need a 20% down payment to buy a home, but this isn’t true. Plus, a down payment of that size isn’t realistic for many first-time home buyers. Fortunately, buyers who can’t afford a 20% down payment have several options, depending on the loan type. It’s important to apply for a mortgage pre-approval before you begin house hunting in earnest. Not only will this help keep you realistic about your options, but it also shows sellers that you’re a qualified and serious buyer.
How to Choose a Mortgage Lender
In a competitive housing market, you may put in multiple offers on homes before one is accepted. Conversely, mounting worry over a housing recession could lead more sellers to pull their homes from the market, making it more difficult to find a suitable property. If you already have your money saved and have a good idea of the neighborhoods and type of home you want, the process will probably take you two to six months. Ask a local real estate agent for a more accurate timeline based on your local market conditions. Your real estate agent will submit your requests to the seller’s agent. If you’re buying a house that’s for sale by owner (FSBO), your agent will negotiate with the seller directly.
At the end of the day, including a contingency can be the difference between keeping and losing your earnest money. Although sellers sometimes balk at offers made with contingencies, some contingencies are worth making regardless of the seller’s feelings about them. To calculate how much home you can afford, consider using the home affordability calculator below. Once you’ve determined how much you can afford, consider the lifestyle you want to maintain and leave yourself a cushion in case of emergencies.
After the inspection, the inspector will give you a list of problems they found in the home. Rocket Homes agents have proven track records of success and are at the top of their field, so you know you’ll get expert information. Use the Rocket Mortgage Home Affordability Calculator to get a rough idea of how much mortgage you can afford. Make sure to read our how-to guide to buying a house before you jump in.
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