FindLaw's Buying a Home section provides in-depth information for first-time home buyers, veteran real estate flippers, and everyone in-between. The Home Buying Guide goes over everything you need to know to buy a house, including lists of questions to ask your real estate agent, mortgage agent, lawyer, and home inspector.
The section on the Home Buying Process provides a step-by-step guide to buying a home, while the Resources section provides checklists and worksheets to help you evaluate what you can afford and how to find the right realtor or real estate lawyer.
A home is typically the largest transaction an individual will make in his or her lifetime, involving several legal and fiduciary considerations. This section will help you get up to speed before you sign on the dotted line.
Can You Afford to Buy a Home?
Before you even start searching for available homes, you need to make sure you're ready to make a long-term financial commitment. This includes more than simply your annual income. Creditors will want proof of financial stability. Financial considerations include:
- Employment History: Be ready to explain any gaps in your work history and whether your income has fluctuated in the past two years (and why).
- Credit History: Your creditworthiness will be reflected in your credit score (based on credit card balances, timeliness of payments, collections history, etc.).
- Available Cash for Down Payment: Most loans require a down payment. The more you pay upfront, the better your loan terms will be (lower monthly payments, lower rate).
- Cashflow: Generally, you don't want your mortgage payments to exceed 28 percent of your monthly income, but you also need to consider the cost of ownership (maintenance, emergencies, improvements, etc.).
The Home-Buying Process at a Glance
Anyone who has bought a home will tell you that it is a complicated, tedious, and often frustrating experience. But there are also many rewards of homeownership. After determining whether you can afford to buy a home, read up on the home-buying process to help you understand what to expect. Working with a real estate agent typically makes the process a lot easier.
The first step in the home-buying process is to create a checklist of things you are looking for in a home in terms of size, location, proximity to work and shopping, and quality of the local schools (to name a few). Go to a few open houses, check real estate listings, visit homes that fit your criteria, and then narrow your list down to homes you can afford.
Now that you have a better idea of how much homes cost in your area of interest, research mortgages and get preapproved for a loan.
When you decide on a home, ask as many questions as you can. After you make your offer, you may get a counteroffer. Real estate agents are experienced negotiators and can advise you on negotiating strategies.
Your offer may include contingencies, a clause in the real estate purchase agreement that specifies an action or requirement that must be met. Typical contingencies include waiting a certain amount of time until the sale of a prior home, getting loan approval, and a home inspection with requested repairs.
When a price and contingencies have been agreed upon, you and the seller will sign documents and determine a closing date (the date on which you receive the keys and move in). You are now on your way to homeownership.
If you need legal assistance with a home purchase, speak with a local real estate attorney.
