Buying a home is a dream come true, but it isn’t easy.
Make sure you do your research before you really start the Montana home buying process. This will help you to get everything in order and have a true sense of a reasonable budget for your financial situation.
Step 1: Evaluate Your Current Financial Situation
There are a number of metrics to consider when deciding whether to buy a house. Would-be homeowners need to take into account things like credit scores, savings, and financing options.
The higher your FICO score is, the more likely you are to get a mortgage with favorable terms. It’s important to know what your credit report says before you apply for a mortgage.
Determine how much you can afford as a down payment what closing costs might be. Some loans require as much as 20% down, but others require much less. There are also government programs that can lower the down payment requirements or help you cover the costs.
In addition to budgeting for your mortgage, you need to make sure you’re prepared to pay all of the additional costs that come with homeownership. You’ll need money to cover things like homeowners insurance, property taxes, and general upkeep. Anything you used to rely on a landlord to take care of is now your responsibility.
Buying a home is more than just a monetary decision; it’s also a lifestyle choice. Even in hot real estate markets, you generally need to stay put for a couple of years before your house increases in value enough to make money selling it. Add in the volatility of the real estate market and you should be relatively certain you’re going to live in your home for a while before you start thinking about making any offers.
Step 2: Find a Great Montana Real Estate Agent
If you’re looking for your dream home, you should be working with an expert. Real estate agents know their market and how to find you the best deal.
Clever Partner Agents offer many benefits to potential home buyers. First, they are all top-rated, full-service agents. Partner Agents also offer on-demand showings so you can look at homes on the right schedule for you.
Additionally, they know how to save you money. In addition to saving you money in the negotiation, Clever Partner Agents can also help you save money with a Home Buyer Rebate. A Home Buyer Rebate, or commission rebate, is when a real estate agent gives a portion of the commission they receive from the seller back to their client. The buyer can then use this money for their down payment, closing costs, mortgage payment, or even opt to receive cash at closing.
Get in touch with Clever’s network of real estate agents today to see if you qualify for a home buyer rebate.
Learn More: What Does a Real Estate Agent Do for a Buyer?
Step 3: Read Up on Local Real Estate Market Trends
When it comes to buying a home in Montana, when you buy can also have an impact on how much money you spend and what kind of selection you see. If you’re looking for the lowest price, try looking in the fall and winter. But if you’re looking for the biggest selection, spring is for you.
These trends can also function on regional levels, city levels, and even micro-levels. Regional fluctuations are another reason it’s important to work with a local agent. An experienced real estate agent will help you time your purchase to get the best possible price.
The Montana real estate market is a buyer’s market; prices are reasonable and property taxes are lower than most other states.
Although real estate prices in Montana are reasonable, they’re also on the rise. The median home value in Montana is $238,600, slightly higher than the national median. In the last few years, home prices have increased considerably. Last year, Montana home prices went up by 7.0%. This year, prices are expected to increase another 3.4%.
Learn More: Will it Be a Buyer’s or Seller’s Market in 2019?
Step 4: Get Pre-Approved for a Mortgage
It’s important to get pre-qualified and pre-approved for a mortgage before you dive into the house hunting process.
Pre-qualification and pre-approval are two different processes. For pre-qualification, a lender gives you an estimate of what you can afford to spend on a home, based on your financial circumstances.
For pre-approval, you go through an extensive credit check. At the pre-approval process, your lender will run your credit and determine what amount (if any) you can be approved for. That pre-approval process will take some time, typically around 90 days.
After you’ve determined the amount of your mortgage loan and your down payment, you can start house hunting. By now, you should know exactly how much you can spend. This will help you figure out which areas you can afford and what you can expect to find in your price range.
Step 5: Start House Hunting
Your real estate agent should sit down with you before you start looking at homes. They will help you figure out your needs, set your priorities, and stick to your budget.
It’s a waste of time for everyone involved if your agent shows you homes that don’t suit your tastes or neighborhoods that won’t work for your family. Your realtor will have neighborhood-specific data and can help find homes you can afford.
Learn More: Free House Hunting Checklist
Step 6: Make an Offer
After you’ve found the right home, it’s time to make an offer.
Once you have a ballpark figure in mind for your offer, talk to your real estate agent. They can tell you whether your figure is reasonable. They will also help you determine an expected closing date. They will know intimate details about the market and how likely your offer is to be accepted.
At this point, you’ll need proof that you’ll be able to pay for the home. You’ll also likely have to show how you will cover additional costs if your offer is accepted.
You may want to include some contingencies in your offer. For example, you may want to require an appraisal, home inspection, or mortgage approval contingency.
Your offer should specify how long the seller has to decide whether to accept, reject, or make a counteroffer.
Along with all of these steps comes paperwork. An experienced realtor will work with you to draft a competitive offer letter that’s more likely to be accepted.
Learn More: How to Make an Offer on a House
Step 7: Inspections and Negotiations
Your mortgage lender is likely to require a home inspection and you may opt to pay for a more thorough inspection than required.
A home inspection is an important part of the purchasing process. When you’re buying a house, you deserve to know exactly what you’re getting. A home inspection will make sure the property you’re buying doesn’t have major flaws, like problems with the foundation or pests.
Home inspections generally cost somewhere between $300 and $500, depending on the size of the property and its location. This cost is typically paid by the buyer, but you may be able to negotiate with the seller on the cost of the inspection.
Your offer should include a limit on the amount of money you’re willing to pay for repairs. That way, if the inspection finds major problems, you have options. You can try to negotiate a new price for the property with the seller, pay the total or partial costs of the repairs, or walk away from the deal.
Real estate agents are expert negotiators and know what to look for. They also know what you should push back on in negotiations, especially given the current market conditions and level of competition for the type of home you’re looking for.
Step 8: It’s Closing Time!
After the negotiation, inspections, and paperwork are all finalized, it’s time to close.
Some of the costs you may have to pay at closing are:
- Loan fees and private mortgage insurance (PMI)
- Appraisal fees
- Escrow for homeowners insurance and property tax
- Deed recording fees
- Prepaid costs to your lender
- Title insurance and survey fees
- Prorated utility costs the seller has already paid
In addition to the down payment, buyers should generally expect to pay about 3% of the home sale price in closing costs. For a median Montana home, worth $238,600, the closing costs would likely be somewhere around $7,160.
That said, closing costs vary from market to market and situation to situation, so an accurate estimate can be hard to pin down. An experienced real estate agent will be able to help you set accurate expectations with regards to what fees and costs you should expect come closing time.