Buying a home is an important milestone in most people’s lives. It’s the realization of the American dream for many first-time buyers. But it involves a complex process with many steps, and any number of things can go wrong along the way. To help you navigate the process, here is a step-by-step guide for home buyers in Kauai.
Check Your Credit Score
For home buyers in Kauai the process typically begins on the financial end of things. So you should kick off the process by checking your credit score.
“[Y]ou want to make sure you’re actually in a position to take on all that buying a house entails. That’s why the first step is to do your research, check your credit score, and review your finances.”
Lending requirements are getting tighter, so you need to know where you stand credit-wise before applying for a mortgage. “Mortgage lenders will request a credit report and, based on the information found, will use your credit score and financial history to qualify you for a home loan. It’s important to be one step ahead of them and know where you stand.”
Determine What You Can Afford
The next step for home buyers is to determine what they can actually afford in a home.
You should probably begin by calculating your debt-to-income ratio (DTI) and see what you can afford to make in monthly mortgage payments. “Look at your current debts and income and consider how much money you can reasonably afford to spend each month on a mortgage.”
And don’t forget to factor in the many other costs of home ownership. These include homeowners insurance, property taxes, HOA fees, costs for repairs and maintenance, and more.
Having checked your credit and determined what you can afford, you should then get pre-approved for a mortgage. This is a step many home buyers skip at this point, but shouldn’t.
“[P]re-approval is helpful because it tells you exactly how much the lender is willing to let you borrow and specifies the costs of obtaining the loan. Being preapproved also tells the seller you’re serious about buying, which can make a difference if and when you find yourself in a bidding war.”
Find a Good Agent
After getting their financial matters squared away, home buyers in Kauai should then take the important step of finding a good agent. Working with an agent is almost a necessity in today’s real estate climate of low inventory and high demand.
“Your real estate agent will represent you throughout the home buying process to ensure you find the right home, ask the important questions, make an appropriate offer, . . . negotiate [the best deal], and receive the necessary disclosures. But perhaps even more important is having a real estate expert in your corner can provide some invaluable peace of mind.”
Begin the Search
This is the point at which home buyers begin the actual home search (in conjunction with their agent).
“Once you’ve met with your real estate agent to discuss what you’re looking for, it’s time to begin house hunting. As you browse, keep your priorities in mind. Remember it’s highly unlikely any listing will perfectly match your dream home, so try not to be too picky until you see the houses in person.”
Make an Offer
When home buyers have a home in the right area that meets as many of their must-haves and want-to-haves as possible, it’s time to make an offer. This is probably the step at which they should lean most heavily on their agent’s expertise.
“When you find a home you want to buy, it’s time to begin the process of making an offer. Ask your real estate agent to run a comparative market analysis to determine a fair price based on recent sales of similar homes in the area. The less interest there is – and the longer the house has been on the market – the more power you’ll have to negotiate.”
And don’t forget about contingencies in your offer. “Beyond the price you plan to offer, you should speak to your real estate agent about whether it makes sense to include any contingencies in your offer. A contingency is a stipulation included in an offer that states that the buyer is free to break the contract without any repercussions if a particular condition is not met.”
To find out more about how to craft the best offer, contact a Kauai agent at 808-634-4518.
Get an Inspection and Appraisal
Now is the time to get an inspection and an appraisal. The inspection will let you know whether the home has any problems or issues. If it does, you’ll have to enter into negotiations with the seller to have the problems fixed, the price reduced, or some other mutually acceptable solution.
The appraisal is important from your lender’s point of view. The home you intend to purchase has to be worth at least as much as you’re going to borrow.
Do a Final Walk-through
Now comes the final walk-through, a step home buyers should not skip.
“At this point in the home buying process, you’re probably eager to be done – but don’t neglect the final walk-through. One last walk-through of the property can help [you determine whether] something needs to be fixed by the seller before purchasing the home.”
Close on the Home
This is the final step in the process for home buyers.
“During closing, the property title will pass from the seller to you. A closing agent will oversee this process, which typically takes place at a title company, management firm, escrow office or your home.”
Where to Find the Agent You Need
As you can see the home-buying process is complex with several steps – at any one of which things can easily go wrong. And that’s why it’s so important to work closely with an experienced Kauai agent throughout. So if you’re among the home buyers in Kauai who want the purchase to go off without a hitch, contact us today at 808-634-4518.