Home buying can be intimidating, especially if you are trying to purchase a home for the first time. You’ll need to research the neighborhood, locate a real estate agent, apply for a mortgage, schedule appraisals, and conduct home inspections. A first-time buyer has a lot of things to think about. Thankfully, there are many professionals available to help you with all your home buying needs. Understanding how the process works is essential, so you aren’t surprised.
Here are some things to remember when buying a house, how to choose a neighborhood, and what you need to be approved for a mortgage loan.
What to Consider When Buying a Home
What should you consider when buying a home? You should consider the size of the house you will need. Do you want a starter house, or are you looking for a home that can accommodate your growing family?
You will generally pay more for a larger home. It is, therefore, essential to set a monthly housing budget before you begin searching for a house.
If you purchase a home, you will be responsible for a monthly mortgage payment unless you are among the few who pay with cash. The homeowners’ insurance and property taxes will be paid. There are also costs associated with maintenance and repairs that can add to your monthly savings.
The style of house that you want will depend on your needs. For younger buyers, a two-story home might be more appealing due to its privacy. Older buyers and multigenerational families may prefer a ranch house with fewer steps.
The location of your home is also essential. Is it possible to live far from work? Which neighborhoods are affordable? What are your priorities? Do you want to live in the city center, or would you rather be in the suburbs?
These are the most important questions you should ask before you search for a home.
You will generally pay more for a larger home. It is, therefore, essential to set a monthly housing budget before you begin searching for a house.
If you purchase a home, you will be responsible for a monthly mortgage payment unless you are among the few who pay with cash. The homeowners’ insurance and property taxes will be paid. There are also costs associated with maintenance and repairs that can add to your monthly savings.
The style of house that you want will depend on your needs. For younger buyers, a two-story home might be more appealing due to its privacy. Older buyers and multigenerational families may prefer a ranch house with fewer steps.
The location of your home is also essential. Is it possible to live far from work? Which neighborhoods are affordable? What are your priorities? Do you want to live in the city center, or would you rather be in the suburbs?
These are the most important questions you should ask before you search for a home.
A Checklist for Home Buying
Are you ready to buy a home for sale in McMinnville, Oregon? These are the steps to help you get started.
Find out how much house you can afford
The first step is to decide how much home you can afford. You must create a household budget by listing your monthly income and expenses. You should include all costs that are changing each month, such as changes in transportation, groceries, clothing, and expenses like restaurant meals, concerts, and movies.
After you’ve figured out your income and expenses, you can see how much extra money you have left each month. Make sure that your monthly mortgage payment, including taxes and homeowners insurance, is not more than this amount when you buy a house.
Your monthly mortgage payment should not exceed your additional income to be considered safe. If your mortgage payment is too high, you’ll have trouble saving or creating an emergency fund.
Your lender will assess your debt-to-income ratio (DTI) when you apply for a mortgage. This ratio measures the relationship between your monthly payments and your income. Lenders prefer that your monthly payments (including your new mortgage payment) do not exceed 50% of your monthly income.
After you’ve figured out your income and expenses, you can see how much extra money you have left each month. Make sure that your monthly mortgage payment, including taxes and homeowners insurance, is not more than this amount when you buy a house.
Your monthly mortgage payment should not exceed your additional income to be considered safe. If your mortgage payment is too high, you’ll have trouble saving or creating an emergency fund.
Your lender will assess your debt-to-income ratio (DTI) when you apply for a mortgage. This ratio measures the relationship between your monthly payments and your income. Lenders prefer that your monthly payments (including your new mortgage payment) do not exceed 50% of your monthly income.
Save for Your Down Payment Early
A down payment of 20% is not required for a home purchase these days. A loan may only require a down payment of 3% of the purchase price. This is still a substantial amount of money. A $250,000 home would require a down payment of 3%. That’s $7,500. This is why it’s so important to save money before you start looking for a home.
A larger down payment is better for your financial future. Private mortgage insurance, also known as PMI, is not required if you have a down payment equal to 20% of the home’s price. In case you cease making your monthly mortgage payments, this insurance protects your lender. The cost of this insurance varies but it can be expected to cost $30-$70 per month for every $100,000 borrowed.
Lower mortgage interest rates are often attributed to higher down payments. This will help you save money every month on your monthly payment. If borrowers have a larger down payment, lenders are more likely to approve them for mortgages.
A larger down payment is better for your financial future. Private mortgage insurance, also known as PMI, is not required if you have a down payment equal to 20% of the home’s price. In case you cease making your monthly mortgage payments, this insurance protects your lender. The cost of this insurance varies but it can be expected to cost $30-$70 per month for every $100,000 borrowed.
Lower mortgage interest rates are often attributed to higher down payments. This will help you save money every month on your monthly payment. If borrowers have a larger down payment, lenders are more likely to approve them for mortgages.
Get Preapproved and Choose a Lender
Another important step to buying a house is applying for mortgage preapproval from lenders. A pre-approval will require you to provide proof of your monthly income. These documents include your most recent two paycheck stubs and two months’ worth of bank statements. The same lender will also inspect your credit scores and credit reports.
This information will be used by the lender to determine if it approves you for a mortgage, and for how much. They will then send you a preapproval note stating how large a mortgage they are comfortable giving.
This is crucial because it will tell you how much house you can afford. You won’t waste your time looking at homes worth $300,000 if you are preapproved by a lender for a $250,000 mortgage.
Preapproval does not mean that you are required to close your mortgage loan with that lender.
Don’t confuse a prequalification for a mortgage with a mortgage application. Prequalification is similar to pre-approval. However, you will not send proof of income to your lender and your lender will not check your credit.
Lenders will instead take your information by phone or email, and then give you an estimate of how much they would lend. Lenders aren’t verifying your income or checking your credit. A mortgage prequalification is a more informational service than a real representation of the size of a mortgage that you might receive from a lender.
This information will be used by the lender to determine if it approves you for a mortgage, and for how much. They will then send you a preapproval note stating how large a mortgage they are comfortable giving.
This is crucial because it will tell you how much house you can afford. You won’t waste your time looking at homes worth $300,000 if you are preapproved by a lender for a $250,000 mortgage.
Preapproval does not mean that you are required to close your mortgage loan with that lender.
Don’t confuse a prequalification for a mortgage with a mortgage application. Prequalification is similar to pre-approval. However, you will not send proof of income to your lender and your lender will not check your credit.
Lenders will instead take your information by phone or email, and then give you an estimate of how much they would lend. Lenders aren’t verifying your income or checking your credit. A mortgage prequalification is a more informational service than a real representation of the size of a mortgage that you might receive from a lender.
Find A Realtor Or Real Estate Agent
You need to hire a Realtor/real estate agent to help find the perfect home. A professional real estate agent can help you find the right home in your area and tell you when it is being priced correctly. An agent can also help you make an offer, guide the negotiations, and negotiate the sale price and move-in date.
The best part is that you don’t have to pay your agent as a buyer. The sellers pay their agent using the proceeds of the home sale.
Ask agents to tell you how long they have been in the industry, how familiar they feel with the area, and how many buyers they have worked with over a year.
Ask real estate agents to provide a list of past customers that you can speak with. Referring agents can help you find the right property and negotiate a lower price.
The best part is that you don’t have to pay your agent as a buyer. The sellers pay their agent using the proceeds of the home sale.
Ask agents to tell you how long they have been in the industry, how familiar they feel with the area, and how many buyers they have worked with over a year.
Ask real estate agents to provide a list of past customers that you can speak with. Referring agents can help you find the right property and negotiate a lower price.
Start Looking for Your Dream Home
After you’ve found an agent, it’s time for you to begin looking for your next home. Start by searching the Multiple Listing Service (MLS), which is an online directory of homes for sale in the United States. The MLS and all its listings can be accessed at Realtor.com.
Your real estate agent can help you determine the type of property that you want in each neighborhood. Your agent can also send you listings of homes as soon as they become available if you tell them your price range. Agents can point you to homes that are for sale before they go on the MLS. This will give you the best chance of making an offer.
Your real estate agent can help you determine the type of property that you want in each neighborhood. Your agent can also send you listings of homes as soon as they become available if you tell them your price range. Agents can point you to homes that are for sale before they go on the MLS. This will give you the best chance of making an offer.
Make an offer and negotiate if necessary
After you have found the perfect home, it is time to make an offer. A real estate agent can help you make an offer and negotiate with sellers in a competitive market.
The seller has three options after you submit an offer: They can accept, reject, or counteroffer it. This last option is often what happens. For example, you might offer to pay $200,000 for your home. Sellers will ask for $240,000. You might settle on $220,000.
The seller’s agent will work with your agent to lead negotiations. Your agent will help you refine the offer, and work with you on the initial offer. If you and the sellers are unable to agree on a final price, you might decide to walk away.
If your offer is accepted, you can begin closing your mortgage, unless it is an all-cash offer.
The seller has three options after you submit an offer: They can accept, reject, or counteroffer it. This last option is often what happens. For example, you might offer to pay $200,000 for your home. Sellers will ask for $240,000. You might settle on $220,000.
The seller’s agent will work with your agent to lead negotiations. Your agent will help you refine the offer, and work with you on the initial offer. If you and the sellers are unable to agree on a final price, you might decide to walk away.
If your offer is accepted, you can begin closing your mortgage, unless it is an all-cash offer.
Consider Hiring A Real Estate Attorney
A few states will require you to hire a real estate attorney for closing a mortgage. Ask your agent to check the laws of your state to see if they require it. Some states have changed their laws, and you might need one now even if that wouldn’t have been the case several years ago.
Even if the state does not require one, it may be worthwhile to have one. Real estate attorneys will examine your loan documents and the title of your home to ensure there are no mistakes. This legal representative will represent you during closing if you have paid for a real-estate attorney.
Even if the state does not require one, it may be worthwhile to have one. Real estate attorneys will examine your loan documents and the title of your home to ensure there are no mistakes. This legal representative will represent you during closing if you have paid for a real-estate attorney.
Schedule your Home Inspection and Appraisal
Once the sellers accept your offer, you will need to order a home inspection.
An inspector will tour the house and look for any problems. Any such problems will be listed in the inspector’s report. These could include anything from termite damage to hot water heaters nearing the end of their life spans, sinking foundations, and aging roofs.
After your inspector has provided a report, you can request that sellers correct the problem, give you money to hire contractors, or lower the asking price. Depending on your contract, you might be able to walk away from the deal if there are too many expensive problems.
An appraiser will inspect the property you’re buying, and take into account the sale prices of similar homes in order to determine the current market value. The home sale may be canceled if the appraiser rates your home below the amount you agreed to pay. Your lender will not loan you more than your home is worth.
Let’s say you agree to buy your home for $250,000. If an appraiser decides your home is worth $230,000 you will have to either produce $20,000 more yourself or convince sellers to drop their price to $230,000. The home sale will be canceled if neither of these things is possible.
An inspector will tour the house and look for any problems. Any such problems will be listed in the inspector’s report. These could include anything from termite damage to hot water heaters nearing the end of their life spans, sinking foundations, and aging roofs.
After your inspector has provided a report, you can request that sellers correct the problem, give you money to hire contractors, or lower the asking price. Depending on your contract, you might be able to walk away from the deal if there are too many expensive problems.
An appraiser will inspect the property you’re buying, and take into account the sale prices of similar homes in order to determine the current market value. The home sale may be canceled if the appraiser rates your home below the amount you agreed to pay. Your lender will not loan you more than your home is worth.
Let’s say you agree to buy your home for $250,000. If an appraiser decides your home is worth $230,000 you will have to either produce $20,000 more yourself or convince sellers to drop their price to $230,000. The home sale will be canceled if neither of these things is possible.
Close on Your New Home
Finalize your mortgage loan closing, and take possession of your new home! The closing can take place in person, most often at a title company office, or virtually. Certain documents will be required to bring to the closing table.
Photo ID: Proof of identity is required. For your photo ID, you can use either a U.S. driving license or a U.S. identification card. If you’re buying a home with someone else, and plan to have their name on the mortgage, make sure they bring a photo ID, too.
Cashier’s check to cover closing costs: Money is needed for closing costs, down payment, prepaid interest, and property taxes. These expenses will not be covered by a personal check. You will need to bring a cashier’s check in the amount required to close your loan. This figure will be provided by your title insurer or lender before closing day. Your bank can issue a cashier’s check. A cashier’s or personal check has one main difference: the bank certifies that you have the funds to pay the amount on the check.
Closing Disclosure: This disclosure lists the final terms of your mortgage loan. It must be provided by your lender at least three business days prior to the closing of your loan. It lists the amount of your loan, your monthly payment, and your interest rate. It also includes how much you pay in principal, interest, mortgage insurance, property taxes, homeowners insurance, and private mortgage insurance. It also includes your closing costs. This is the amount that you will need to pay at closing. This form will allow you to verify that you’re paying the correct amounts on your loan.
Proof of Insurance: You will need to provide proof of insurance before your lender will approve you for a mortgage loan. If your home is destroyed or damaged, this policy will protect you. Your insurance company will offer you a payout that can be used to pay for the rebuild or damages.
Photo ID: Proof of identity is required. For your photo ID, you can use either a U.S. driving license or a U.S. identification card. If you’re buying a home with someone else, and plan to have their name on the mortgage, make sure they bring a photo ID, too.
Cashier’s check to cover closing costs: Money is needed for closing costs, down payment, prepaid interest, and property taxes. These expenses will not be covered by a personal check. You will need to bring a cashier’s check in the amount required to close your loan. This figure will be provided by your title insurer or lender before closing day. Your bank can issue a cashier’s check. A cashier’s or personal check has one main difference: the bank certifies that you have the funds to pay the amount on the check.
Closing Disclosure: This disclosure lists the final terms of your mortgage loan. It must be provided by your lender at least three business days prior to the closing of your loan. It lists the amount of your loan, your monthly payment, and your interest rate. It also includes how much you pay in principal, interest, mortgage insurance, property taxes, homeowners insurance, and private mortgage insurance. It also includes your closing costs. This is the amount that you will need to pay at closing. This form will allow you to verify that you’re paying the correct amounts on your loan.
Proof of Insurance: You will need to provide proof of insurance before your lender will approve you for a mortgage loan. If your home is destroyed or damaged, this policy will protect you. Your insurance company will offer you a payout that can be used to pay for the rebuild or damages.
Buying a Home is Worth the Checklists
There are many steps involved in purchasing a home, but it’s all worth it when you end up with the home of your dreams. You can build wealth once you own a house. This is possible by paying off your mortgage and increasing the equity in your home. Your own private retreat is a place you can unwind after a long day, or build a family.
Get started today with our pick for top real estate agents in McMimminnle, Oregon
McMinnville Real Estate | Doty Team
Established in 1998, the Doty Team from McMinnville Real Estate is a full-service real estate company committed to serving their clients, city, and community by providing a broad range of high-quality services. Dedicated to helping people achieve their dreams of home ownership, all agents excel in customer service and work hard to stay on the cutting edge of the industry’s ever-changing demands.
TOP AGENTS
Dom Doty
(503) 435-9070
(503) 435-9070
Devri Doty
(503) 435-7165
(503) 435-7165
Mackenzie Kauer
(971) 241-2066
(971) 241-2066