Steps toward Buying a Home

Each home buying transaction is different, in some way, to the other thousands of home purchase transactions that take place every month. The specifics about your journey to home ownership will vary depending on your individual needs, preferences and financial profile, as well as the needs and preferences of the property seller. But many of the steps toward buying a home will be very similar, even though they might not follow in the same order in every transaction.

This article will take a step-by-step look at a generic home buying transaction. You will most probably feel more confident about your home buying transaction when you understand what is required of all the parties involved in the process of transferring property ownership.

Get Your Finances in Order

The biggest obstacle in the way of owning your own home is arguably the money. You will most probably need to save up an amount of money to cover all the expenses of purchasing a home, and obtain a home loan from a mortgage lender, in order to pay the balance of the purchase price for the home.

Save up

Discipline will be very important to save up your home buying nest egg. But your history of handling your money matters is just as important as having the cash to pay for transfer costs, transfer duty and a deposit.

Check your credit

Your credit reports are an ongoing record of how you manage your finances. It is very important that you know exactly what your credit reports say about your financial history, before applying for a home loan. The credit reports play a very important role in the lender's decision to approve your mortgage application, in determining the interest rate you will be paying, and in the other loan terms that a lender would be willing to offer you.

Credit reports can contain errors, which can be easily corrected if you know about them. But if you do not look at your credit reports BEFORE applying for a home loan, the lenders will assume the credit reports to be correct, and may decline your application for a mortgage bond. So, if you haven't looked at your credit reports yet, do so NOW!

Learn About the Mortgage Industry

Read about what mortgage lenders look for when considering a home loan application. The better you understand what the lenders require to approve your mortgage bond, the better you will be able to stave your mortgage application, and the quicker the home loan approval will come.

It's up to you to determine which lender best fits your needs, and it's always a good idea to have at least a bit of background about the loan process before you talk to a lender.

Finding the right home loan for your specific situation can also be crucial to your home buying success. So, find out what home loan options there are and match your needs to the mortgage product.

Get Pre-Approved for a Home Loan

Some people will tell you that lenders do not pre-approve people for home loans any more. But if your mortgage business is in any way important to the lender, they will gladly pre-approve your mortgage.

Mortgage pre-approval will help you toward successfully buying a home in a number of ways.

Firstly, you will know exactly how much you can spend on your home purchase. No more guessing about the price range you need to be looking at! The answer will be there in front of you in black and white.

Mortgage pre-approval also helps you to make a strong offer to purchase that ideal home.

Consider this scenario: A home seller gets two similar offers to purchase his/her property. A letter from a lender accompanies one offer document, stating that the offeror is pre-approved for a mortgage in the amount of the offer. The other offer has no supporting documents. Which offer do you think the seller will feel more confident about?

Determine Your Wants and Needs

By knowing what you absolutely need in a property, and also being aware of what you would very much like (which is not absolutely necessary), you can narrow down the house hunting before you start looking at houses.

Buying a home is an expensive business. And you probably feel that you have too little money to find a home that is right for you. But buying a home isn't as difficult as you might think, even if you think that you are short on funds.

The process of finding the right home will go a lot smoother if you understand exactly what you need from a home, and know what each type of property can offer you.

Learn about the real estate market

Only when you understand the current real estate market in your area will you know how to approach the offer to purchase a particular property.

You need to find out if you are dealing with a seller's market, or if the seller you will be dealing with can be expected to be negotiable. You need to know how long houses take to sell, on average, so that you will now if a house is still fresh on the market, or if it is becoming "stale".

Learning about the real estate market may take some research on your part. Taking the easy way and relying on one real estate agent's rendition of his/her impression of the market might prove to be a costly mistake.

Learn to Work with Real Estate Agents

Real estate agents can represent buyers, sellers, or both buyers and sellers. In South Africa, it is generally accepted that one real estate agent will be ale to look after the interests of both the buyer and the seller in a property transaction.

It's essential to understand what an estate agent's duties and loyalties are, before you blab too much. If the real estate agent has a mandate from a seller, his/her first priority is to the seller. When working with the seller's real estate agent, you need to take care of your own interests, because the real estate agent will look after the seller's interests, not yours.