Even if you’re ready to put an end to annual rent increases, you might be unsure if buying a home is the right financial move. The home buying process can be intimidating. Unlike moving to another rental unit where you simply give a 30-day notice and pay a new security deposit, buying a home takes more time, money, and patience.
Relax and review these 10 steps to gain confidence about your ability to navigate the homebuying process.
Step 1: Evaluate your financial standing.
Check your credit health by reviewing copies of your credit reports from each of the three major credit reporting bureaus: Equifax, Experian, and TransUnion. Review your reports for accuracy and dispute any errors. Poor credit can disqualify you from certain mortgage programs.
How much do you have saved for a down payment and closing costs? It's hard to know how much you’ll need to save without knowing how much you already have set aside for your new home.
Step 2: Research your options.
Browse online listings to get average prices for homes in your chosen area. Use Vermont Federal’s How Much Mortgage Do I Qualify For? calculator to help estimate if the home prices fit your budget.
Step 3: Confirm your financial readiness.
Obtain a mortgage loan pre-qualification or pre-approval to help narrow down your home search. A pre-qualification lets you know how much loan you might qualify for using answers to basic financial questions.
A pre-approval differs from a pre-qualification in that the mortgage lender requires independent verification of your financial information. Pre-approvals give sellers confidence in your ability to obtain a loan for the amount of your offer.
Step 4: Select a real estate agent.
A real estate agent can educate you about the local market. They can also present offers on your behalf and will likely negotiate a better deal than if you submitted the offer on your own.
Step 5: Shop for your new home.
Whether you prefer online tours or in-person showings, it’s time to tour homes in your price range. While it might be hard, you’ll need to narrow down your list as you prepare for the next step.
Step 6: Make an offer - or two.
Be prepared to make an offer on more than one home. A competitive housing market might mean your first offer isn’t accepted, and you’ll need to keep looking.
Step 7: Get a home inspection.
Before you close on the home, you’ll want assurance there aren’t any major problems before you become the new owner. Most offers are contingent on the results of the home inspection.
Step 8: Get the home appraised.
Most lenders require an independent appraisal to protect you from paying more than the home is worth. The appraiser tours the home and provides an estimated value to ensure you pay a fair price.
Step 9: Close on your new home.
On closing day, all paperwork is signed to make sure the transaction is legal. A few days after the documents are finalized and the seller is paid, you’ll have keys to your new home.
Step 10: Move into your new home.
Back up the moving truck. It’s time to pack your boxes and move into your new home!
While home buying timelines and costs will vary based on local market conditions and other factors, there's nothing stopping you from taking your first step to homeownership today! Learn more about Vermont Federal's low-interest rate home loans when you speak with one of our experienced Mortgage Originators. Contact us at (802) 252-0202.