How To Buy A House Step By Step
The very first thing you need to do when trying to buy a house is to see how much you can comfortably afford. This is particularly true if you are going to be depending on external funding from lenders such as banks. So, for that very reason, here is the first step to buying a house:
Getting pre-approved by a financial lender is a wonderful way to get things rolling. This will achieve two things, it will give you a good idea of what your borrowing power is in the current market and it will help you narrow down your focus as to what kind of property you can buy.
There is no point to seriously start looking at homes in London if you can only afford property in the outskirts of Burnley. Pre-approval will also give your estate agents the right kind of confidence to actually take you seriously and show you houses in earnest.
But, even before you get pre-approved, there are several other financial steps involved:
- Check your credit rating.
- Improve your credit rating by clearing as much of your outstanding debt as possible.
- Consolidate your credit card debt.
- Find ways to increase your income levels so you can afford more.
Once all this is done and you are pre-approved, here is what you do next.
Find the right house
Using your budget, find a house that will allow you to repay your loan comfortably without straining you financially. This can be difficult because it is in human nature to reach for the stars. We always want what we can’t have. To keep you grounded, remember that putting a down payment on the house and actually paying your monthly instalments is not all you have to deal with financially. There are other financially straining aspects involved such as:
- Closing charges.
- Solicitor, inspector fees and such.
Once you have all this considered, it is time to:
Make an offer on the house
Once you have done all these calculations with the help of your estate agent as well as found the right house, it is time to make an offer on that piece of property. Always try to low-ball the asking price a bit. Not by too much as to make the seller disregard you as a non-serious buyer, but by enough to ensure that you still have some change in your pocket should the deal go through.
Get a solicitor and a surveyor
The surveyor will give you the lay of the land and show you what kind of issues, if any, exist on your new property. The solicitor, on the other hand, will handle all the legal work. They will run checks on the property as well as the seller to ensure that you are not paying for something that does not exist. They will also charge a small fee for these services. This fee is to be agreed upon before everything starts.
If you want reliable references for solicitors and surveyors, attending property meets like PIN Meetings with Simon Zutshi and We Buy Houses Community Meetups with Rick Otton are good places to start. These are places where seasoned investors meet monthly, and they will be the ones who would know which solicitors are the best. The best part about these meetings is that they are free events, so registering should be pretty straightforward.
This is just a general outlay of the financial steps involved in buying a house. Do not over-stretch financially and don’t get too excited and forget to run all the necessary checks. That is how people end up losing money.