Nearly everyone’s bucket list includes purchasing a dream home. However, many people go through life thinking it can’t be done. Perhaps people feel discouraged because the process of buying a home seems complicated and daunting.
In this article, I will take you through the entire process of buying a home in Charlottesville VA. I will guide you through the process, letting you know everything you should be doing at each point of the process.
How to buy a house?
The city of Charlottesville is centrally located in the eastern foothills of the Blue Ridge Mountains in the Central Virginia region. It was established as a town in 1762 by the Virginia General Assembly and was incorporated as an independent city in 1888.
If you are planning to purchase a home here, you can start by researching early.
You can read websites, newspapers, and magazines that contain real estate listings. Take note of particular homes you are interested in and check how long they stay on the market. See if there are any changes in the asking prices. This kind of information will help you get a sense of the housing trends in Charlottesville VA.
Then, you need to determine how much house you can afford. The rule of the thumb is to aim for a property that costs about two and a half times your gross annual salary. This will help ensure that you will not be taking on a larger mortgage commitment than you can afford.
Once you’ve found a Charlottesville VA home that you really like, learn as much as possible about the property before putting in an offer. Find out how long the house has been on the market. If it has been on the market for several months with no offers, chances are it could be overpriced or it could be a slow market.
You can also look up the sales history of a home to find out how much it was previously purchased for. This will also give you an idea of how long previous owners stayed in the home.
Remember that the neighborhood is just as important as the house.
After all, there’s no point in falling in love with a home in an area you can’t stand.
Research the neighborhood you are interested in. Check out its school quality ratings, as they are often an indicator of the quality of the neighborhood. You also have to take a look at its architectural style, safety, amenities, and your commute.
What do you need in order to buy a house?
Since buying a home is a huge investment, you have to make sure that you are financially prepared. You also need to strengthen your credit score.
A credit score is a statistical number that shows a person’s creditworthiness. The credit score is used by lenders to evaluate the probability of a person repaying his or her debts. It is a three digit number ranging from 300 to 850, with 850 being the highest score that a borrower can get. If you get a high credit score, it means you are a financially trustworthy person. On the other hand, a low credit score may hurt your chances of getting the financing.
To avoid problems, check your credit report from the three major credit reporting companies. By law, you’re entitled to one free report each year. Since errors are common, it is better to check your report first before your lender does. That way, if you find inaccuracies, you can have them corrected before they affect the mortgage lending process.
So how do you strengthen your credit score? One way is by paying down your balance. Thirty percent of your score is based on the amount you owe. However, you also have to consider your credit utilization. This refers to the ratio between how much you owe compared to how much credit you have. So if you have the means, drop your credit card balances.
If you are currently not in a position to pay down your credit card balances, you can still improve your credit utilization by asking for a credit limit increase.
For example, if you’ve maxed out your $2,000 card and get a limit increase to $4,000, you will instantly cut your credit utilization rate in half. Just remember that the goal is not to spend any of your new credit. Otherwise, you will be defeating the purpose of getting a limit increase.
How can you buy a house with bad credit?
Buying a home can be a serious challenge, especially if you have bad credit. We all know that lenders prefer lending money to people who have an unquestionable track record of paying off debts because they want to make sure they will get their cash back, too. Lenders check your credit score to see how well or how bad you’ve handled your financial obligations.
If you have less-than-ideal or poor credit (a score of 650 or below), there are still options that can help you turn your dreams of homeownership into a reality. Although it may not be easy, there are still ways to get it done.
- Check your reports
It’s not enough to have a vague sense of how bad your credit score is. You need to know where you and your credit history stand. In fact, you should check your credit report before meeting with a mortgage lender. You’re entitled to a free copy of your report from each of the three major credit bureaus (Equifax, Experian, and the TransUnion) at AnnualCreditReport.com.
Make sure to check if there are any errors because creditors frequently make mistakes when reporting consumer slip-ups. If you find any, contact the institutions that provided the erroneous information and have them update it. This can help increase your credit score.
- Save up for a larger down payment
One simple solution you can do is to start saving for a larger down payment. Doing so will send a signal to lenders that you have the ability to handle the loan despite your low credit score. This will also increase your equity in the house up front, which will immediately lower your loan-to-value ratio.
- Get an FHA Loan
Another option for prospective home buyers with poor credit score is getting a Federal Housing Administration loan. To qualify, you need a minimum of 580 credit score. Aside from that, FHA loans allow you to make a down payment as low as 3.5%. However, you will have to pay a mortgage insurance premium since the federal government insures these loans.
What are the steps in the home buying process?
Preparing to buy a home can be both exciting and terrifying at the same time. Every state requires slightly different steps to purchase a home. However, they are very similar.
Here are the steps to homeownership in Charlottesville VA:
- Determine what you can afford.
Before you start house hunting, work out how much you can afford to spend on buying a house and the monthly mortgage.
- Get pre-approved for a mortgage
Getting pre-approved for a mortgage will let you know exactly how much money you have to spend. That way, you don’t waste time looking at houses you can’t afford to buy.
- Create a home wish list
You can create a list of wants and needs to help narrow down your choices for your new home. However, be flexible as you likely won’t find a home that has all the features and amenities you want.
- Choose your real estate agent
Don’t try to buy a home alone because it’s not as easy as it looks. You will benefit more from the professional assistance of a real estate agent.
- Search for Charlottesville VA homes for sale
This is the fun part of the home buying process. Make a short list and begin touring homes. Take note of what you like and don’t like about each home.
Take a look at this video that highlights the reasons why you should choose a home in Charlottesville VA:
- Make an offer
Your real estate agent will walk you through the steps required to make an offer on a home in your area. The three basic components of an offer are price, terms, and conditions.
- Get final mortgage approval
Once your offer to purchase is accepted, contact your lender or mortgage officer to proceed. Avoid making any major purchase until after the closing as that can affect your mortgage qualification.
- Order a home inspection
A home inspection is necessary to check if there are any major repairs that need to be made. A good inspector will give you advice for proper maintenance and upkeep. He will also point out potential or existing conditions that may affect the value of the property.
You may be able to negotiate your contract with the seller if you put an inspection contingency in your contracts.
- Attend the closing
You will be on your way to the closing table once all the above steps are done. While every transaction is different, expect that you will be signing a lot of paperwork.