Navy Federal | MakingCents: Home Buying 101

[MUSIC PLAYING] So you’re ready
to buy a house? Well, we’ll do our
best to make you feel right at
home, as we discuss the process of purchasing. Let’s go over the steps. [MUSIC PLAYING] Before you can start
seriously house hunting, you’ll need to have an
idea of the type of home, features you want, and
proximity from your job. [MUSIC PLAYING] Next, you’ll meet with
a lender to determine which mortgage is best for you. Work with your lender
to get a pre-approval– a letter verifying
the loan amount you’ve been approved for. This amount is based on
your income, assets, debt, and creditworthiness. With this information,
you’ll know how much you can spend on a mortgage. A realtor can suggest
properties based on your budget and criteria. Your realtor will help you
navigate through all the steps involved in purchasing. [MUSIC PLAYING] When you find a home
that’s right for you, you’ll need to make an
offer to the seller. And if your offer is
accepted, secure a contract to purchase the property. However, once you’ve
made an offer, it doesn’t necessarily
mean it’s final. When a price is agreed on,
it’s customary– but not always required– to make a deposit. This money goes in escrow
while the details of the sale are worked out. This deposit shows the
seller that you intend to purchase the property. When the seller and the
purchaser agree on the terms, the sales contract is
signed, and the house is under contract. But there could be contingencies
within the contract for home inspections,
appraisal, lead-based paint testing, and more. Once your contract
is signed, you’ll need to complete
the loan application to secure your mortgage. At this point, you’ll
need to provide documentation– such
as pay stubs, W-2s, and bank statements. You’ll also have the chance
to lock in your interest rate with your lender. Sometimes you can pay
to lock in a lower rate before closing, if rates drop. Once you’ve completed these
steps, you’re ready to close. Your realtor will recommend
a settlement agent, who will make arrangements
for your closing. Closing on the home means
the sale is complete, and all the terms and conditions
of the contract have been met. At this point, the
seller gives the buyer the title to the property. On average, the fees involved
in closing will total about 3% of the loan amount. This amount may vary based on
your home’s location, cost, and other factors. If your closing costs are
3% on a $100,000 loan, you’ll pay $3,000
in closing costs. Now that you know
the steps, you’re ready to purchase a house. Then it’s time to turn that
new house into your home. Have fun.

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