How To Buy a House in the United States - Everything You Need to Know
Getting tired of renting a home and thinking about buying your own place? Property ownership is an important milestone that requires careful preparation, thorough research, and a lot of paperwork. The whole process may be complicated and time-consuming, but it is worth it. Next time instead of filling out a rental agreement, you will be filing paperwork as a homeowner.
How to Buy a House?
If you're looking to buy a home, but are not sure where to start - find a reliable real estate agent. You do not have to pay any fee to the agent and you will be accompanied by a professional who will lead you through the buying process supporting and providing you with useful advice. Do keep in mind, however, that a house sold through a real estate agent implicitly includes a supplement for the agent’s commission.
What to Look for When Buying a House?
Among all the steps leading to buying a house, the most important one is to understand clearly what is a "must" and what is "nice-to-have". You will need to watch out for a lot more than just the price and location. First of all, define the lifestyle you are leading or are going to lead in the near future. Do you have a big family? Do you or one of your family members have any mobility issues? Think over the monthly budget you can spend for utilities. Determine if the neighborhood is important to you. All these points will help you understand the size of the house you need, the yard you prefer, the number of bedrooms, and other important issues.
A good idea is to create two lists for your real estate agent. The first list would include everything absolutely necessary. The second one would list the nice-to-have items.
How Long Does It Take to Buy a House?
The home buying process may take a lot of time. You can find the house you need in a few days, or you can search for it for several months. It all depends on your specific needs and your local market offer. Once the perfect house is found, you can make an offer. It normally takes about 2 to 3 days for the seller to come up with a decision.
The next step is home inspection and appraisal. This part may take up to two weeks. If everything is in proper order, you begin the closing process. The average time to get approved for a mortgage takes nearly 50 days. To shorten this period, take care of your paperwork and be preapproved for a mortgage in advance.
What Do I Need to Buy a House?
To avoid unnecessary delays, get familiar with the real estate forms and gather the required documentation beforehand. Download real estate purchase agreements and real estate bill of sale templates and look through their basic sections and requirements. However, the paperwork necessary to buy a house is not limited to a purchase agreement.
Here is the list of documents to help a first-time homebuyer to be ready for a home buying process:
- If you are a foreigner and do not have a social security number, apply for an individual taxpayer identification number via Form W-7 to be eligible to make a deal in the United States;
- Request a copy of a credit report and examine your FICO score. If it is low, you may want to apply for an FHA loan that does not rely on this score;
- Make photocopies of your current pay stubs. The last two will fit best;
- Prepare your copies of wage and tax statements (W-2s) for the last two years for your lender;
- Make copies of your two last federal tax returns and all the additional schedules. Make sure they have your signature and date on them;
- Prepare copies of bank statements for the last two or three months (depends on the lender). When making copies, include every single page, even the blank pages;
- If you have any bonds, stocks, retirement accounts, or mutual funds, prepare copies of your asset statements. Make sure you have included copies of each statement;
- If you meet your lender personally, take your driver’s license with you for identification. In another case, make a copy of the current driver's license.
Remember, that this is only a basic set of documents you may need in the process of buying a house. Every specific case may require a lot more paperwork.
What to Do After Buying a House?
The first thing you should do after buying a house is to create a new financial plan including your calculations of tax deductions, maintenance costs, and insurance. Check if you are eligible for homestead exemption. Many local authorities will offer you to fill out a homestead form that can save you some money on property taxes. Check if a house warranty was provided when buying a house. If not, consider purchasing one. Besides, get familiar with your neighborhood Covenants, Conditions, and Restrictions, a set of local rules designated for preservation and protection of property value in the community. If you intend to convert personal use property to business use, get acquainted with local laws and regulations first to avoid troubles with local authorities.