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Homebuying 101: A Checklist

Various home buying steps are standard in the process of finding and ultimately purchasing a home. While location, individual circumstances and various other factors may change some of the steps or the events that take place before you actually purchase a home, ultimately you are about 7 steps away from purchasing the home of your dreams. Understanding the steps involved in purchasing a home can help you to progress through the process more efficiently and more smoothly too.

Step 1: Prepare Your Finances

A thorough review of your credit report should be first on the agenda if you're even considering a future home purchase. Blemishes can dramatically reduce your borrowing power and may even prevent you from obtaining a mortgage all together. You'll also need to consider down payment options and should start saving early on so that you can cover fees and costs associated with closing.

Step 2: Get Pre-Approved for a Mortgage

Unless you've already talked with a lender, you probably don't know exactly how much home you can afford or what your loan options are. A mortgage pre-approval will help you to better understand how your credit report plays into your ability to purchase a home, why your income matters and how a single debt could change everything. A mortgage pre-approval will also help you when it comes to placing an offer on a home that you wish to buy. The lender will provide you with a pre-approval letter that states you are financially prepared and preliminarily approved for a mortgage that could cover the cost of the home.

Step 3: Create a Wish List

What are your wants and what are your needs? Before you start house hunting you should create a wish list that outlines that characteristics that your home must have and those that you hope for it to have. Sort the list based on items that you want and items that are absolute necessity and then do what you can to narrow down necessity items to the absolute minimum. This will help you to save money and find a home that has everything you need without overpaying for things you may not use.

Step 4: Consider Potential Areas or Neighborhoods

Before you begin searching for homes you should consider what areas or neighborhoods you want to live in. Will you prefer to be close to A rated schools or the city? Do you prefer to be in a low crime neighborhood or an upcoming area of town? All of these considerations should be taken into account before you begin looking at homes. A real estate agent can answer many of the questions you may have about local neighborhoods so now is a good time to hire an agent to work with you.

Step 5: Hire an Agent

An agent can assist you in the final steps of finding and purchasing a home. He or she will connect you with local properties that meet your needs and expectations and can work for you in negotiating the sale of the home that you choose. Your agent will also provide you with details on neighborhoods that may appeal to you and can advise you on whether a home is priced appropriately and what type of offer or counter offer would be appropriate in your situation.

Step 6: Make an Offer

The offer that you make will either be accepted or rejected by the homeowner. If the offer is accepted, the next steps toward the home purchase will take place. If the offer is rejected, the homeowner may counter offer or the lead may end there. If a counter offer is received, you will have the ability to accept, reject or counter and can take steps to fine-tune the details along the way.

Step 7: Tests, Inspections and Closing

Once the offer is accepted and the mortgage is a "go" the final tests, appraisals and inspections will be performed as a precaution for the lender. Upon clearance, the underwriter will finalize your application for a mortgage and you will be advised to schedule a date with the seller for closing. During closing, the transfer of ownership from the current owner or seller to you will take place and keys will be exchanged; welcome to your new home!

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