The Homebuying Process
Buying a home can be confusing and challenging, especially if it is your first time. There are several steps that homebuyers need to take to purchase a home successfully.
Step One: Financial
What can I afford? How much of a downpayment do I need? Do I have the necessary credit score to obtain a conventional mortgage? There are plenty of online mortgage calculators. Try this one at mortgagecalculator.org.
- Plan for a down payment, which is the money you pay upfront to buy the home. You should put down 20% of the cost of the home to avoid extra fees. However, if you cannot afford that, you can put down anywhere from 0-10%, depending on the type of loan.
- Check your credit report to ensure you have a decent credit score and clear up any errors.
- Find a lender for pre-approval. Once pre-approved, you can research property types and locations to determine your preferences.
Step Two: Bring in the professionals.
Although not all are necessary depending on city, county and state regulations, we are providing an overview of what each professional service provides in the homebuying process.
Real Estate Agent
Real Estate agents can help you find a property that meets your needs. Finding an agent in advance allows you to find someone who might be very knowledgeable in the area or building you are looking for and can help you navigate the buying process.
Some states require an attorney for real estate transactions. It is best to research and locate an attorney BEFORE you are ready to make an offer. This gives you ample time to research an attorney’s experience, rates, and reviews/referrals.
Home Inspectors look at the bones and basic structures and provide a report including items that need immediate attention, potentially need to be fixed, and items in good condition. This allows you to make an informed decision when purchasing a home. We look at the inspection report as a roadmap for future expenses necessary in all home ownership.
Step Three: Home Shopping
Start looking at listings that fit your criteria. Your real estate agent will provide online listings of available properties that match your budget in your desired location. If you aren’t working with an agent, the property's listing agent will become your agent in the transaction.
Step Four: The Offer
Once you have found a home you like, you can make an offer, which involves putting down earnest money to show the seller you are serious about the offer. If you've hired an attorney and or a home inspector, be sure your contract includes a process for reporting and approving any edits to the contract.
After your offer has been accepted and all necessary approvals have been met your mortgage lender will order the appraisal. This is to ensure that the contract amount matches current home sales and that you are paying a fair price for the property. This is also the period where your attorney will perform a title search to ensure that the property is free of any encumbrances, such as liens or judgments. They will ensure all the necessary paperwork is submitted for the property to transfer and complete any deed filings required by your city, county, and state.
Finally, you will close on the home, which involves signing all the closing paperwork and loan documents, paying the closing costs and down payment, and receiving the keys to your new home.