Buying a Home in Lincoln Square
The process of buying a house can be complicated, long, and confusing - especially if this is your first home purchase! Here are some things you need to know before you get started.
Before you begin looking for a new home, figure out if you're ready to buy. Just because the mortgage payment would be the same as a rent payment doesn't mean you can afford a house. There are a few extra expenditures that you'll need to be prepared for. First, take a look at your budget and figure out how much you can spend a month on housing costs. A good rule of thumb is 1.) a home's value should not be greater than 2.5 times your yearly income; and 2.) monthly housing costs should not exceed a third of your monthly gross income.
You also need to get pre-approved before looking for a home. A few months before you apply for a loan, make sure your credit score is correct and in good standing. Order your credit reports from all three of the major credit agencies and check for mistakes. You'll need to contact those agencies directly to sort out any issues, but those errors could significantly affect your mortgage rate. Getting pre-approved for a home loan will give you a general price range, which can help you narrow down your options to only properties that are affordable.
Next you need to find the team of professionals that will help you throughout this process. A real estate agent and mortgage lender are most important. Your relationship with both of these people should be open, honest, and based on an understanding of your needs and desires. If your Realtor is not exclusively a Buyer's Agent, make sure to ask about conflicts of interest. You can research your options for lenders and Realtors on the Internet to get an idea of what companies are in the area. But make sure to call up the agencies and banks to personally inquire about rates and services. The real estate market is highly localized, so it pays to hire someone familiar with the neighborhoods you are interested in.
Once you find a house to put an offer on, do some research on the neighborhood. Try to visit the house at a few different times of day to see the lifestyle of the neighborhood. Check on the zoning permits in the area to see what the neighborhood could look like in a few years. Even if you don't have children, check out the schools: this is an important re-selling point.
Make sure when you negotiate terms for the sale of the house, you include a condition for the house passing inspection. You should also find your home inspector before you put the offer down since you usually only have a few days to get the inspection completed. This inspection is not to determine if the house is up to code, but to describe the condition of the house as it is. Most inspection prices are based on how much time the report requires, so you'll pay more for a report that includes recommendations for repairs. These recommendations, though, are useful when negotiating and are important to know about before signing a contract.
Once you and the seller have agreed on the contract, call your mortgage lender and work out the terms of the loan. Here's when you decide to go with a fixed or adjustable rate. The lender conducts a credit check and an appraisal of the house, and usually will require you to have homeowner's insurance before approving the loan.
The closing is rather simple, after all the work that has gone into finding your new home. Make sure your agent explains the process so you know what to expect. Then move in and enjoy your new home!