Buying a home can get quite detailed. Here are the steps to take to ensure you’re prepared for the exciting road ahead.
Choose a Vermont REALTOR®
Why? A Vermont REALTOR® will help you with all the following steps and more. He or she will save you time and money by researching properties based on your criteria, helping you secure the best mortgage rates, counseling you on the offer amount and terms most favorable to you, and negotiating on your behalf.
Decide What You Want
Before you start looking, make a list of what you want. Then assign each item a priority. Some areas to consider are:
• Location: How close do you want to be to your job, shopping, your children’s schools, or entertainment?
• Type of home: A single-family house typically provides the most space and gives you fewer restrictions on customizing your home. On the other hand, a condo offers amenities without yard work—for an additional price.
• Age of the home: Existing homes have mature yards and established neighborhoods; however, they require more maintenance. Although new homes aren’t always without problems, they usually require less maintenance initially. Of course, you may have to put in landscaping and endure nearby construction.
Know What You Can Afford
Consider these factors:
• Down payment: Most loans require a down payment. The amount varies, but 20% of the purchase price is typical. If you’re a first-time buyer or fall below certain income thresholds, you may qualify for an affordable mortgage program. Generally, a higher down payment means better loan terms and a lower interest expense on the mortgage.
• Qualifying for a loan: A lender will determine how much they think you can afford based on your income, employment history, education, assets (e.g., bank account balances, other property, insurance policies, pension funds), and debt. Check your credit report before the lender does to clear up any problems.
• Your comfort level: You don’t have to spend $200,000 on a home just because the lender says you can afford a $200,000 home. Do some math and determine what you’re comfortable spending.
Make an Offer
You’ve figured out your home-search criteria and what you can afford. Now find a house and make an offer. Your Vermont REALTOR® is invaluable in this part of the process that involves many steps, including:
• Preparing a contract and the myriad contingencies and details contained in the contract.
• Handling negotiations with your best interests in mind.
• Juggling inspections and option periods.
Unless you’re paying cash for the home, you’ll need a loan. Keep in mind the true price of financing goes beyond the interest rate alone. Consider items such as points, total lender fees, term of the loan, and penalties for early payment. The lender will likely require an appraisal to verify that the home is worth the cost of the loan, as well as a physical inspection. Repairs may be required. Insurance must be purchased. All of these conditions, and more, must be satisfied before a transaction can close.
Close the Deal
After weeks or even months of research and decision-making, you close the transaction, usually at an attorney’s office. The attorney will ask you to sign many, many documents and will explain each one. You’ll present a cashier’s check or a wire transfer, sign another document that itemizes closing costs (the lender will have given you an estimate in advance), and pay your share of the closing costs. In return, you will receive a deed, transferring ownership rights to you.