If you’re a new home buyer, you might be wondering how to buy a property and the steps you need to take to get there. While buying a property isn’t exactly the easiest thing in the world, there are many resources you can use to buy your first property with ease. Articles such as this one can help you understand and prepare for the buying process. Below is everything you need to know about how to buy a condo.
Explore Different Cities
The most important step when buying a property is to explore different cities. Different cities will have different market values, meaning their homes will sell for higher or lower, or build equity over time. For instance, condos St. Louis-based offers can increase at a rate of around 1.6% every year, which is the average shift today.
Other cities, such as Los Angeles and San Francisco, will also increase in property value. However, it might be more difficult to save up to live in one of these cities. Continue to explore different neighborhoods to find the best match for you and your family. Things to consider include:
- Crime rates
- Averge home size
- Parking availability
- Nearby schools
- Nearby parks and shopping centers
- How close it is to work
Save For a Down Payment
After you’ve settled on an area, research the average cost of a condo in that area, and then research how much of a down payment you will need. The average down payment for a condo is around 3.5% to 20%.
Most people will save around 3.5% to qualify for an FHA loan, and 20% if they have poor credit or plan on flipping a home. Depending on which loan option you’ll use, you need to save up for anywhere between these percentages. In addition, the more you save, the better loan options you will have.
Consider Different Loan Options
It’s never a good idea to stick with a single mortgage lender. While FHA loans have a standard rate of around 6.4% as of 2022, this rate is subject to change and fluctuate. Similarly, different loan lenders will also offer different rates for closing costs and services.
If you’re not using an FHA loan, you will also need to shop around for the best rates and less fees. Other lenders might offer perks, such as covering the costs of your HOA fees for the first several months!
These are just some of the different ways you can save money with a lender. Shop around to find the best deal for your condo.
Wait for Approval
After you find the lender that’s right for you and get pre-approved, you can then submit all relevant paperwork for your loan. Paperwork for a loan will include:
- Tax documents from past 2 years
- Current income statements
- Current debt
- Bank statements from past 2 years
- Paperwork for you and your partner
Once you have all of this paperwork ready, your mortgage lender will look through it and determine if you qualify for their loan.
Wait for the Closing Process
During the “closing” process, you will enter a phase known as escrow. During the closing of the escrow process, you and your lender will work on sealing the deal, having them fund your new condo. You might also need to have money put aside to pay for notary fees, property taxes, and other fees. These are known as closing costs.
It’s important to have a significant amount of money put away in closing costs, which can help save you significant stress in case you have more fees than you bargained for.
Fortunately, after escrow closes, the hard part is the owner, and you will receive the keys to your new condo!