It is possible to buy a home without hiring a real estate agent.You could save thousands of dollars by doing so.If you enjoy doing research and are skilled at negotiating, you will be able to find your house without the help of an agent.Even if you don't have a real estate agent, you still need an attorney for the closing.
Step 1: Total your debt and monthly expenses.
If you don't already have a budget, creating one can help you figure out how much of a house you can afford.It's important to make sure the debt you already have is manageable since getting a mortgage means taking on significant debt.How much of a monthly payment you can afford depends on how much you have spent.Your mortgage payment should be less than a third of your income.It should be at least a quarter of your monthly income.Having a monthly payment in mind helps narrow the range of homes you can buy.
Step 2: Check your credit score.
You can pull your credit report from all 3 credit bureaus.Federal law entitles you to a free credit report each year.You have to pay a fee for the other two.You can use free services to monitor your credit.If you see errors on your credit reports, it's a good idea to get those corrected before you apply for a mortgage.In the first year after you buy a home, your credit score will likely go down.If your score is in the 600s or higher, you shouldn't have a lot of problems.
Step 3: To verify your income and debt obligations, you should gather documents.
You need at least 3 years of tax returns and 6 months of bank statements to apply for a mortgage.You may need statements from your investment accounts.Insurance statements or other information may be required by the lender.You can get a list of documents from the lender.Get more accurate offers by gathering documents in anticipation.You can get copies of your tax returns from the IRS.
Step 4: Contact at least 3 mortgage companies.
If you're looking for a mortgage, compare several offers to make sure you get the best deal.Large national lenders as well as smaller, regional banks and credit unions are some of the types of lenders that you can apply to.If you've been with that bank for at least 5 years, apply first.Verification will be easier if you already work with them.You can get a better rate from a bank you have a relationship with.Multiple inquiries won't have a negative effect on your credit score because shopping around for a mortgage is the responsible thing to do.
Step 5: Make a list of neighborhoods where you want to live.
Real estate values in a city can be very different.Look at listings in areas where you would like to live.You can use your monthly payment calculations to find neighborhoods with houses you can afford.If you're not familiar with the city, look into the reputation of any neighborhood you pick.Make sure to check out the information about the neighborhood.If you are going to commute to work, you might want a neighborhood that is easy to get to.You would want to evaluate the local schools if you have kids.It might be a good idea to look in more than one neighborhood in the metropolitan area.
Step 6: You can check real estate listings online.
You can search for houses by driving through neighborhoods or reading the newspaper.There are a lot of listings on real estate websites.You can limit your searches based on the neighborhood, listing price, and other characteristics of the property.You can search exclusively for houses that are for-sale-by-owner.It may be easier to focus on the listings.It would be better to negotiate with the other owner than with an experienced real estate agent.You don't need to limit your search to the listings of the FSBO.
Step 7: Sell homes in the area.
Comparable listings tell you if the asking price is fair.You can research homes of similar size, age, and characteristics in the neighborhoods you're interested in.Determine what houses are selling for.The focus should be on listings in the last 6 months.If you're interested in a house, compare it to other listings in the area.If the asking price is significantly higher, look for differences in the property that would explain it.If the asking price is lower than other listings, you should go through a similar process.Find out how long the house has been on the market by talking to the sellers.Try to figure out what motivates them to set a price.
Step 8: You can make an offer on the house.
If the homeowner has an agent, it's a good idea to find a house that you like.Make an offer and talk to the agent.The homeowners should negotiate directly with the house's owners.You can craft your offer by looking at comparable listings.Take the unique features of the property into account.Your initial offer will usually be less than the maximum you're willing to pay for the property.Don't insult the homeowners by making your offer so low.Make sure you check the laws when drawing up the offer.In some states, you'll need an attorney to draw up the formal offer.
Step 9: Negotiating with the owners of the house.
The owners will usually come back with a counteroffer.If your offer was below their asking price, expect a counteroffer.You can either respond in writing or meet in person to discuss the property.Explanations for your offer, including comparable listings.Be willing to compromise, but also be prepared to defend your offer.If the owners have an emotional attachment to the home, negotiations may get heated.Emotions can cause people to believe a property is worth more than it is.If the owners aren't actually ready to sell their home, be prepared to walk away.
Step 10: A home inspector can look at the house.
You need an inspection and an appraisal before you buy a house.The inspector looks at the inside and outside of the house.The inspector would be chosen by your agent.You need to do this on your own since you don't have an agent.Ask the listing agent if they have any recommendations.The buyer's agent is usually present during the inspection.The listing agent may want additional compensation if you ask them to be there instead.If you've placed an offer on a house that is FSBO, you may need to hire an agent to be present during the inspection.If you want to find out for sure, talk to a real estate attorney.
Step 11: An attorney should be hired for the closing.
Most states require the buyer and seller to be represented by an attorney at the closing of a real estate transaction.If you don't have to hire an attorney, it will save you a lot of time and effort and reduce the risk of an error in the paperwork.You still want to make sure the attorney you hire has experience handling real estate closings, even though you're hiring them for a transactional purpose.A free initial consultation is provided by many real estate attorneys.It's a good idea to talk to 2 or 3 first, so you can make sure you're hiring the best attorney for your needs.
Step 12: The purchase agreement needs to be signed.
The final terms of the sale, along with an amount of "earnest money" you must deposit, are included in the purchase agreement.The house will be off the market once the purchase agreement is signed and the earnest money is deposited.The earnest money must be held by a third party.The listing agent would usually hold the money until the house is sold.If there isn't a listing agent, either you or the seller should hire an attorney to act as the escrow agent.
Step 13: You can lock in your interest rate with your lender.
It is possible that your pre-approval included a guaranteed rate.Once you've found the house you want, finalize the mortgage with your lender.Pre-approvals are usually only valid for a short time.If it's been several months since your pre-approval, your lender may require additional paperwork, such as updated bank statements.You'll get an exact interest rate as well as a figure of how much your monthly mortgage payment will be once you've chosen your house.
Step 14: Your attorney can help you with the closing paperwork.
The papers you need to sign to buy the house will be reviewed by your attorney.There may be hundreds of pages depending on the size and complexity of the deal.You have to understand anything you sign.If a document is confusing, ask questions.
Step 15: A final look at the house.
Since you were last in the house, make sure nothing has been damaged.Make sure the repairs were made after the inspection if you and the seller agreed.You may need to bring the original inspector back to verify that the repairs have been made.
Step 16: The closing paperwork should be signed by you.
After meeting with the sellers and their attorney, you and your attorney will sign the paperwork and close the house.You can either sign the agreements in the same room or separate them.The last chance to ask questions about the agreement is this.Make sure you comprehend it.The house will be yours after everything is signed.