When initially moving to the US it is normal for people to start by renting a home in an area of their choice. It is not necessary to work with a buyer’s agent, but it is advised if you select somewhere over $5,000 per month.
Useful websites for your search:
What is required?
• Rental Application
• Background and credit check
• Proof of income; usually pay stubs unless you are self-employed. The gross monthly income must equal approximately three times or more the monthly rent.
• Application Fee – usually $35 per adult.
• Application must have good references from previous landlord.
• Rent deposit – this is usually 1 months rent. If you are new to the US, you will have no credit history. Landlords will require a larger deposit. 2 months might be required in this case.
Check you credit score and work out your monthly costs: The higher your credit score, the better your interest rate will be on your mortgage. Good credit will mean you will safe more on your monthly payments.
Personal Financial experts suggest that your monthly payment should not consume more than 30% of your take home pay.
It is also sensible to plan to live in this home for a while – 10 years. A realtor will charge between 5-6% of the sales price, divide this over a couple of years; the total moving cost is far higher.
Have money for a down payment: Ideally the minimum deposit to put down should be 20%. Some lenders will allow 10% or even less, but you will have to pay for Private Mortgage Insurance (PMI) this is a safety net for the bank, if you do not make your payments. This is typically between 0.3% and 1.5% of the mortgage and varies depending on your down payment and credit history.
See whether it makes sense to rent or buy before making your decision. The New York Times has a useful calculator that will help with your decision. Renting vs Buying
Get pre-approved for your mortgage: Once you have determined your budget, next step is to get pre-approved.
In order to get pre-approved you will need to find a lender. This can either be done through a bank, or a mortgage advisor. It is best to look at both options, so you can compare the best deals for you.
Principal of HD Realty Partners, Alistair Hodgson recommends that you have a pre-approval letter from you lender, before you start house hunting, this lets everyone know you are a serious buyer. Also in situations where there are multiple offers, sellers are more likely to accept an offer from a buyer with a pre qualification letter.
Find a real estate agent to work with: It is important to have a good
relationship with your Real Estate agent. You will spend a lot of time with them, and a Real Estate agent who puts client satisfaction as a priority is key. Unfortunately is the US agents are typically on commission-based pay only and as such there is little culture of mentoring or learning good client servicing skills. There is a sink or swim culture which produces some good sales people, but not much client care.
Search for properties within your price range: It is important to set out your criteria and budget and stick to them. One should consider the area, schools, also, how many bedroom and bathrooms you need. If you have any deal breakers, then let your agent know. You should research the market, so that you are well informed, which is easy to do these days on websites like Zillow.com, look at all comparable properties so you can get an idea of value.
Make sure you are comfortable with the offer you submit: A good Real Estate agent will be able to best advise how to submit a good offer, especially if there is competition from other potential buyers. It is easy to get caught up with the bidding process, but make sure you stick to your budget. If the price goes over what you are comfortable with, then you have to be prepared to walk away.
But when you find the right property, make sure you act quickly and have your agent submit you offer ASAP. In competing situations put your best foot forward, and submit all information demonstrating that you can close, and quickly. Sellers are looking for certainty, the highest bid, does not always get accepted.
Closing: Your agent will guide you through the closing process and should push to make sure all the timings are met. If the seller accepts your offer, you will enter contract before closing, and the deal will be contingent upon you securing a loan with your lender, getting the home inspected, and doing a walk-through inspection 24 hours before closing.
Be prepared for closing costs such as appraisal fees, attorney fees, title insurance, property transfer taxes, and inspection fees, which can add up to be about 5% of the mortgage amount.