Get Pre Approved
The first step in buying a home is to get pre approved by a mortgage lender, such as a credit union or a bank. A lot of people want to start viewing homes immediately, but you should do this step first. Without the mortgage lender, you don’t know what your budget is, or how much you can afford. You don’t want to look at $300,000 homes only to find out you can only afford a $200,000 home!
Your lender will want to verify your income by checking your past tax returns and check stubs. They will also run your credit. You have a good chance of qualifying for a loan as long as you have a credit score of at least 580 (the higher your score however, the lower your payments will be). Check out my article about your credit score if you want to learn more about how you can improve your credit score.
Look For Homes (in Your Budget)
Now that you have your pre approval letter in hand, you can start looking at homes! Reach out to a good realtor (such as myself) and let them know what you are looking for. Also remember to let him know what you have been pre approved for, so they can find the right fit for you at the right price.
Also, make sure you put some thought into what you really want in a home? Are you looking for a single family or a multi unit? How many bathrooms & bedrooms to you want? Think about the most important things that you want. For some, it may be a master bathroom, and to others it may be a big fenced in backyard. Other’s will be happy as long as everyone in their family has their own room. Taking the time to think about what’s most important to you will really help save you time and stress when you start viewing homes. This way, when you see something that matches, it won’t be hard for you to pull the trigger and go after the home of your dreams!
Once you find the home you want, its time to make an offer on the home. Talk to your realtor about how much your offer should be. Your realtor should be able to guide you through making an attractive offer based on how the market is operating, as well as other factors. For example, in the Chicago area, the inventory of homes is pretty low when compared to the number of buyers out there looking for homes. Because of this, good homes tend to sell fast, going under contract within the first week in some occasions! Make sure to work with your realtor to put together a competitive offer that will get accepted.
Inspection Period
If you make it to this step, congratulations! In Illinois, it is customary (though not required) to hire a real estate attorney to represent you. Now is the time to get them involved so they can look over the contract and make sure everything is okay. Also, on a standard contract, you have 5 business days to get an inspector out to the home to look over the home for you.
During the inspection, a professional will look at every aspect to look for anything and everything that you have missed, or may not have known about. They will look at everything from the roof to the basement. If you do find something in the inspection that you don’t like, try not to worry about it. Speak with your attorney, who can then negotiate with the seller’s attorney on resolving the issue (the seller can make the requested repairs, or maybe offer some money to you so you can make the repairs, etc.)
Close on Your New Home!
Once you and the seller come to an agreement on the inspections, you just wait for the bank to do their thing. Often, they will ask you to sign more paperwork, and a lot of it may feel like it’s the same thing you’ve signed earlier. Make sure to stay in constant communication with your lender, who should be able to explain everything to you. Also make sure to ask your lender exactly how much money you need to bring to closing, just to be clear. Once all the paperwork is finished, the lender will schedule a closing, where you finally get the keys to your new home!
Buying a home can be a very simple and smooth process, especially with the right advisers beside you. Any questions or concerns, please feel free to reach out to me. Thanks and have a great day!