9 Steps to Buying Your Home

9 Steps to Buying Your Home

9 Steps to Buying Your Home

Step 1: Get Prequalified for Your Mortgage

The first thing you will need to know is how much you can actually spend. The best way to do that is to get prequalified for a mortgage. You will need to prepare some financial information for your mortgage banker. Prepare documents such as your income, savings and what investments you have made to fill out the paperwork. Your lender will review this information and tell you how much they can lend you. Lenders generally recommend looking for homes that cost no more than three to five times your annual combined household income. This formula holds tried and true if the home buyer can make a 20% down payment and has only a moderate amount of other debt. The result will tell you the price range of the homes you can look for. Later, you can get approved for the actual mortgage, which involves providing your financial documents. Be prepared to bring such items as W-2 statements, paycheck stubs, and bank account statements so your lender can verify your financial status and credit.

Step 2: Research

As soon as you know what you can afford, start reading websites, newspapers, and magazines that have real estate listings. Make a note of particular homes you are interested in and see how long they have stayed on the market, note any changes in asking prices, and be sure to check if there are homeowner association fees. The fees can seriously drive up the overall cost to live in a house. Researching will give you a sense of the housing trends in specific areas.

Step 3: Find the Right Real Estate Agent

Real estate agents are essential partners when you’re buying or selling a home. Agents can provide you with helpful information on homes and neighborhoods that isn’t easily accessible to the public. Our knowledge of the home buying process, negotiating skills, and familiarity with the area you want to live in can be extremely valuable. Best of all, it doesn’t cost you anything to use an agent. The commission is paid to agents by the seller of the house, not the buyer.

Step 4: Shop for Your Home and Make an Offer

It’s helpful to make a list of exactly what you’re looking for before going out. After you’ve gotten your feet wet can be an excellent time to start your list too, and certainly, add to it as you go. Start touring homes in your price range. You should see as many houses as possible, so it’s important to take notes on all the homes you love and even some you think you don’t. It can be hard to remember everything about all of them, so you can also take pictures or video to contemplate your most loved homes for later. The decision may even be difficult.
Make sure to check out the little details of each house.

For example:

  • Test the plumbing by running the shower to see how strong the water pressure is and how long it takes to get hot water
  • Try the electrical system by turning switches on and off
  • Open and close the windows and doors to see if they work and lock properly

It’s also important to evaluate the neighborhood and make a note of things such as:

  • Are the other homes on the block well maintained?
  • How much traffic does the street get?
    Is there enough street parking for your family and visitors?
  • Is it conveniently located near places of interest to you: schools, shopping centers, restaurants, parks, and public transportation?

Take as much time as you need to find the right home. Then work with your real estate agent to negotiate a fair offer based on the value of comparable homes in the same neighborhood.

Once you and the seller have reached agreement on a price, the house will go into escrow, which is the period it takes to complete all of the remaining steps in the home buying process.

Step 5: Get a Home Inspection

Typically, purchase offers are contingent on a home inspection of the property to check for signs of structural damage or repairs that need fixing. Your real estate agent will usually help you arrange to have an inspection conducted within a few days of your offer being accepted by the seller. This contingency protects you by giving you a chance to renegotiate your offer or withdraw it without penalty if the inspection reveals significant material damage.

Both you and the seller will receive a report on the home inspector’s findings. You can then decide if you want to ask the seller to fix anything on the property before closing the sale. Before the sale closes, you will have a walk-through of the house. This gives you the chance to confirm that any agreed-upon repairs have been made.

Step 6: Choose a Mortgage Banker & Select Your Loan

Choose a lender with a wide range of competitively priced loan programs and a reputation for exceptional customer service. You may have many questions when you are purchasing a home, so having an experienced, responsive mortgage banker assist you through the process can make it much easier.

Each home buyer has priorities unique to them when choosing a mortgage. One may be interested in keeping monthly payments as low as possible. Another may want to pay it off quickly. And still, others pick a loan knowing they will be moving again in just a few years. If you are planning to refinance soon after, make sure a prepayment penalty is not written in. Take time to understand the mortgage very well so you don’t run into surprises that can be very costly.

Step 7: Have the Home Appraised

It is up to the lender to arrange for an appraiser. He or she will provide an independent estimate of the value of the house you are buying. The appraiser is a member of a third party company and is not directly associated with the lender. The appraisal will let all parties involved know what a fair price for the home is.

Step 8: Coordinate the Paperwork

As you can imagine, there is a lot of paperwork involved in buying a house. Your lender will arrange for a title company to handle all of the paperwork and make sure that the seller is the rightful owner of the house you are buying.

Step 9: Close the Sale

At closing is when you must sign all of the paperwork required to complete the purchase, and this usually takes place at the title company. The package of paperwork can be inches thick, so plan to be there for about 30 minutes, at the least, taking into consideration they can be late to the appointment. After that, it typically takes a couple of days for your loan to be funded once the paperwork is returned to the lender. Once the check is delivered to the seller, you are ready to move into your new home!