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By Stephen Sellner | Citizens Bank Staff
You’ve found the one — the house you’ve been searching far and wide for! Now it’s time to put your money where your mouth is and make an offer.
But before you do that, take a step back. Your first home is a big financial commitment, perhaps the biggest of your life, so you want to ensure you have all the information needed to make a wise offer.
Check off these steps and you’ll be well on your way to making an offer on a house:
One of the first steps of making an offer is ensuring you physically have the cash needed to do so. That could mean selling investments or consolidating savings from multiple accounts so you have the cash needed to afford your down payment and closing costs. This is important to do before moving on to Step 2.
Remember: you don’t need to put down 20% as a down payment. You’ll also want to set some cash aside for an emergency fund.
We’re going to safely assume that you don’t have enough saved up to buy your first home outright in cash. With that in mind, take care of the necessary work with your lender by getting prequalified and/or pre-approved for a mortgage. That way, the seller — and your real estate agent — know your offer is legitimate.
You’ve probably done a ton of research up to this point, but you’ll want to make sure you’ve covered all the bases before making this big decision.
Here are some things to research again, or for the first time:
Note: You could probably get the utilities estimate from the seller before making an offer.
Your lender will let you know how much mortgage you could get prequalified/pre-approved for, but that doesn’t mean you should offer that amount on a home! Only you know how much you can/can’t afford, and that involves creating your budget.
Calculate what your monthly mortgage payment, taxes, insurance, utilities, and homeowners association (HOA) fees would be. Can you afford that much each month in addition to your other expenses and savings targets?
This exercise will help you set a maximum budget for any and all offers. That way, you don’t get caught up in the heat of the moment and outbid someone for a house, only to stress over how to afford it.
By now, you’ve toured the house once. Take another pass through it, this time with a fine-toothed comb. There may have been things you missed the first time around because your mind was thinking of a thousand different things at once. Is there any part to the home that needs renovating? What’s the condition of the house’s exterior?
The first time, you were deciding if you liked the house. The second time, you’re deciding if you like it enough to invest hundreds of thousands of dollars in it.
The home inspection — a must when considering buying a property— will outline if any expensive repairs are needed on the home. If something comes up, you could renegotiate the offer or ask the seller to fix any issues before you buy.
For example, if the home inspection determines the roof needs fixing, you could either ask the seller to fix the roof before you buy it or incorporate the cost of the roof repair into a renegotiated offer.
Don’t overlook this step! Remember that you’re not just buying a home, but choosing a new location to live in for the foreseeable future. That means interacting with neighbors and living in a community.
Do the neighbors seem welcoming? What do they think of the neighborhood? Are there power outages often, requiring a generator?
See what information you can glean from them before making an offer.
This goes beyond your commute to your current job. Yes, that’s important to consider, but it’s very possible that you’ll change jobs in the next five years or so. How close is this house to jobs you could have in the future?
Also, how accessible is it to public transportation? Is that critical to your current or future jobs?
Would this be your “forever home?” If so, there could come a day when you need to expand the home.
Perhaps you need to accommodate an aging parent by turning the basement or attic into a separate living space for them. Decide if this home has or needs that room for expansion.
Putting an offer on a home is super exciting, but also stressful. Do your homework ahead of time with these nine house-buying steps so that your offer makes the most sense for you and your financial situation.
Are you looking to get prequalified for a mortgage? Contact a Citizens Bank Loan Officer today!
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