Homebuyer education takes the mystery out of buying a home and helps you become an educated, empowered buyer. As an educated buyer, you are more likely to make good decisions and avoid pitfalls. Purchasing a home is a big decision. You have to be prepared.
Homebuyer education includes attending a Home Stretch Workshop and meeting with a homeownership counselor. When you are ready, homeownership counselors can help you successfully complete all the steps of buying a home. Contact Johanna Bjork at Achieve Homeownership (507-696-4025) for information about Home Stretch courses and to meet with a homeownership counselor. Spanish courses and interpretation services are available.
Decide What is Affordable
Consider how you spend your money each month and what you can afford for a mortgage payment. Be sure to include all your expenses (childcare, car insurance, food, clothing, etc.). People often think what they can afford for a home is what the lender loans them. Wrong! What a lender says you can borrow may not be what you can afford.
After you decide what you can afford, get prequalified for a mortgage loan. Prequalification is an estimate of what you can borrow to buy a home, based on your gross income and debts. Since prequalification is an estimate, you do not have to complete an application or provide documentation (pay stubs, debt payments). You should not be charged any fees. A homeownership counselor is also able to provide you with an estimate of what a lender might loan you, and inform you about the different mortgage loans available.
Select a Lender
Once you choose a lender you should be preapproved for a mortgage loan. Preapproval does not guarantee you a loan, but it does mean the lender commits to giving you a mortgage loan if you and the home you plan to buy meet certain requirements and conditions. Most lenders charge a fee for preapproval. They also require you to provide proof of your income and debts (paystubs, tax returns, bank statements) and review your credit report. Don’t be afraid to ask questions!
Select and purchase a home
You may use a real estate agent of your choice or purchase a home without one. However, a real estate agent can help negotiate the sales price, explain the terms of the purchase contract and guide you through the home inspection process.
Prepare and Negotiate a Purchase Agreement
Once you find a home you want to buy, your real estate agent or attorney helps you write and negotiate a purchase agreement. This is a written contract signed by the buyer and the seller stating the terms and conditions under which the property will be sold. Sellers decide whether or not to accept a purchase agreement. It is common to negotiate the purchase agreement with the seller.
Professional Home Inspection
A professional home inspection will find current and potential problems with the property – problems that are not always visible to the average buyer, like a deteriorating roof and water damage. A professional home inspection is worth the expense and can save you money in the long run.
Contact Your Lender
Your lender will finish processing your loan application and have the property appraised to make sure it is worth the amount you want to pay for it. After everything is approved, you receive a commitment letter from the lender. By signing the commitment letter you agree to the conditions of the loan. Make sure you understand the conditions before you sign!
Closing is a meeting to sign paperwork and transfer ownership of the home from the seller to you. Closing is attended by you, the seller, possibly an attorney or real estate agent, and the closing agent. Your lender may also attend closing. Once closing is complete, you are given the keys to your new home.
Take good care of your home
Your home is now your most valuable asset. To get the most long term value out of your house, you must maintain or improve its quality. Seasonal and ongoing maintenance is critical to keeping and increasing its value.