Home Buying Checklist
Many aspire to have a lovely house to call their own.
However, for most, buying a home is the largest financial decision of their lives, and the entire process can seem daunting.
Navigating the complex world of real estate involves understanding intricate financial and legal details, as well as more common concerns such as property lines and potential flood risks.
Fortunately, the team at Mutual of Omaha is filled with professionals dedicated to guiding you towards securing your ideal home. Yet, the challenge often lies in pinpointing the right experts. Numerous first-time buyers get overwhelmed by the complexities and choose to continue renting. To make things smoother, we’ve crafted a guide to streamline your journey to your dream home!
Determine your budget
Owning a home ranks high among life’s significant financial commitments. Before setting foot in potential properties, ensure that the price of your ideal home is within your means.
The majority of potential homeowners seek financing to acquire their new residence. It’s deeply disappointing when a mortgage request falls through. Thus, assessing your financial situation prior to searching for homes is a crucial initial move.
Gather Your Down Payment
After assessing what you can comfortably spend on a home, the subsequent step involves figuring out your down payment amount.
Your down payment largely depends on your chosen mortgage type. For traditional mortgages, initial down payments typically range between 3% and 5% of the property’s selling price.
However, to bypass private mortgage insurance, a down payment of 20% is necessary.
For FHA loans, a down payment of 3.5% is needed. Some mortgage options, like the government-supported USDA and VA loans, offer the chance to finance the entire value of the home without any initial payment.
No matter your down payment’s size, it’s wise to reserve some additional funds for closing expenses and potential repairs identified during the home inspection.
Get Pre-Approval from Mutual of Omaha
Before starting your house hunt, it’s crucial to understand your budget. Having a pre-approval letter in hand will show sellers and their agents that you’re a serious buyer.
Remember, there’s a distinction between pre-qualification and pre-approval. Pre-qualification gives you an estimated loan amount from a lender, while pre-approval delves deeper into your finances to confirm the specific amount they’re ready to offer.
Find A Real Estate Agent
Working with a real estate professional can be invaluable when on the hunt for a new home. These experts have a keen eye for newly-listed properties and are deeply familiar with the local housing landscape, offering insights that can guide you to your ideal residence.
To locate a trustworthy real estate professional, seek out referrals from loved ones, delve into online feedback, and converse with multiple candidates before selecting the one that aligns with your needs.
Moreover, potential homeowners should be at ease regarding agent fees.
A common misconception among novice home buyers is that they shoulder the agent’s fee. In reality, the seller typically covers the commissions for both their own and the buyer’s representative. This means assistance from a buyer’s agent often comes at no direct cost to you.
Look For The Perfect Home
Once you determine your budget and ensure any potential property meets your lender’s requirements, the real adventure starts. It’s time to embark on your home search journey.
When house hunting, draft a list of essential criteria that matter most to you. While the thrill of finding a potential dream home can be overwhelming, it’s crucial to remain focused. Avoid letting an attractive feature distract you from potential issues with the property.
Communicate your preferences and priorities to your real estate agent. They can then provide a tailored selection of properties that align with your needs. This not only streamlines your search but also ensures you don’t waste time on unsuitable options.
Make An Offer And Negotiate
When you’ve discovered your dream home, the next step is to place a bid. Your property specialist will assist and, in many instances, steer the process.
Several factors influence your bid, such as:
- The current temperature of the property market
- The listed price of the home
- The presence of competing bids
- The duration the home has been up for sale
The homeowner can agree, reject, or come back with a modified proposal to your initial bid. If the homeowner doesn’t accept, you’re free to submit a revised bid.
Included in your bid is a commitment deposit, generally ranging from 1% to 3% of the home’s price. This deposit is held in a secure account, awaiting the homeowner’s response.
Should you have second thoughts and withdraw your bid, this commitment deposit is handed to the homeowner. If all goes well, it’s used towards the initial payment and any finalizing costs associated with the mortgage.
Get Final Approval On Your Mortgage
After the seller approves your bid, the official mortgage application journey starts.
While you already have a pre-approval, be prepared to furnish more documents to your lending agent as the underwriting stage advances.
Don’t forget to consult with Mutual of Omaha to understand the necessary financial paperwork for the final endorsement.
Schedule A Home Inspection And Appraisal
Once you and the seller have agreed on the home’s purchase price, the subsequent steps involve organizing a home inspection and appraisal.
The home inspection verifies that the property adheres to required standards and that elements like the foundation and roof are in good structural condition. The inspector will evaluate systems such as plumbing and electrical, furnishing you with a comprehensive review of their findings.
Beyond the standard inspection, some potential homeowners opt to check for radon and mold presence.
Although getting a home inspection isn’t mandatory, it’s strongly advised to identify potential hidden issues that may influence the property’s worth down the line.
Conversely, an appraisal is mandatory to ensure the home’s value aligns with the loan’s amount.
The appraiser assesses the property’s market value by examining comparable property values in the vicinity and gauging the overall state of the home.
Close On Your New Home
Kudos! You’re on the brink of becoming a homeowner. While your real estate representative and mortgage advisor will handle the bulk of the procedures, there are still some things left for you to complete, including navigating through a heap of documents.
Here’s a brief overview of what’s in store for you on the day of the close:
- At least three days prior to closing, your financial institution will provide you with the closing details.
- You’ll have an opportunity for a final review of the property either on or before the closing day.
- Make sure to bring either a bank-certified check or arrange a wire transfer to address your down payment and associated costs.
- Remember to have evidence of your homeowner’s insurance on hand.
- Don’t forget a valid form of identification.