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Tips for Buying a Home on a Budget

A house is likely to be the most expensive purchase you’ll ever make. Even with a tight budget, you may still be able to find your dream home. While you don’t want to skimp on the amenities you love, adding too many can drive up the cost and destroy your budget.

Make a list of your must-haves, ie., the number of bedrooms, bathrooms and/or fenced in backyard. Keep in mind, on a tight budget, things like granite countertops or a finished basement  - are not must-haves. You can always upgrade to features like these a bit later when your budget is not a limiting factor.

Below are tips on how to buy a house on a budget

StepOne
What price home can I afford? Compare mortgage rates online, and look at the types of mortgages available (conventional, FHA, fixed-rate, adjustable-rate - knowing the difference between these will help you figure out what house is right for you). Get a pre-approval which is a commitment from a lender for the amount that you can borrow. Fortunately, getting preapproved is relatively quick and simple.

Step Two
Hire a real estate agent. Locate a great agent by asking for referrals from folks who have recently used an agent. Meet with the agent and ask questions about experience, compensation, and recent sales/purchases. Negotiate commission with the agent, how much goes to buyer realtor and seller realtor? You may have to sign an agreement to work solely with this agent, if you are not comfortable with that, find a different agent.

Step Three
Look online, go to open houses. Start looking around at what’s available. Use filters to quickly find the right listings to explore. For example, if you want a particular school district, a school search feature will allow you to search and find homes within the district for sale. Visit as many open houses as you can. The more homes you see, the more knowledge you have about the market and your options.

Step Four
Make an offer. When you’re ready, put in your offer. Now, it’s up to the seller to respond. The seller may accept it or counter-offer, and then your agent will help you decide how to negotiate. Once everyone agrees, you are considered under contract to buy the house.

Step Five
Finalize the loan. You already have the pre-approval. Now you just have to finish things up by making it official. Let your lender know you’ve found a house. The lender will order an appraisal and give you paperwork to fill out. Your loan now goes through the underwriting process before it’s finally approved.

Step Six
Close to your house. This is the day you become a homeowner, however, you have some paperwork to complete. Arrive at your closing with all necessary forms (driver’s license, a cashier’s check for your down payment and closing costs and anything else you were told to bring). You will sign and initial tons of papers. When this is all over, take your keys and go home!

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