My Five-Step Guide to Home Buying
STEP 1: Determine your budget
Even before you start looking, you should figure how much you can comfortably afford with an online tool like the mortgage calculator. Insert some basic information to get an estimate of how much you can spend on a home.
Save for a down payment
A big part of your mortgage will depend on how much you pay upfront with your down payment. More often than not, the higher the down payment, the better the interest rate will be. If your down payment is less than 20%, you’ll likely need to pay private mortgage insurance. I can connect you with a lender to better understand your options and decide the best down payment for your situation.
Don’t forget about closing costs
These are taxes and fees paid at closing and usually total 2%–5% of the final sale price. Often times we can ask the seller to help with some of these costs by asking for a seller subsidy in our offer.
Step 2: Get pre-approved for a mortgage
When submitting an offer on a home the listing agent is going to want to see you are pre-approved. We show this to them in the form of a lender letter. This letter from the lender outlines your financial ability to follow through on your offer. I can introduce you to a reputable and highly rated lender if you’d like.
Apply for pre-approval
Once you have a lender, you’ll apply for pre-approval. The lender will ask for financial documents—tax returns, pay stubs, bank statements, student and car loans, credit card statements, and check your credit—to accurately assess your financial situation. Remember that just because you’re now pre-approved for a certain dollar amount it doesn’t mean you can actually afford a home at that price. Determine a personalized budget to figure out the right amount to pay. When it’s all said and done you’ll be the one that will be paying the mortgage. I want you to be comfortable paying that figure you come up with.
Step 3: House Hunting
If you’re anything like most buyers, you’re glued to the internet looking for homes. You may want to hone in on your future home by narrowing down your search criteria. Decide on your ideal locations, and make a list of things your new home has to have and maybe a few things that are deal-breakers. You’ll want to consider commute times to work, amenities in the area, and possibly school districts. If you’re having a difficult time figuring it out let’s set up a time to discuss it further.
How long does the home buying process take? Today the home buying process is pretty streamlined as buyers are able to eliminate many homes from the photos and information they’re able to gather online. I’ve had buyers decide to buy the first home they’ve walked and others that have taken significantly longer. All that matters is that you get into the home that is best for you. Once we’re under contract with a home we’ll normally close on it in 30 to 60 days.
Step 4: Submit a winning offer
Together you and I will craft an offer that suits your needs but still compelling for the seller. I will put together a comparative market analysis to determine the offer price. We’ll discuss ways to make your offer stand out against any other potential offers. In this conversation, we’ll determine which contingencies should be included. Once I submit your offer, it will be presented to the seller. They’ll either accept, decline, or submit a counteroffer.
Counter-offers happen regularly in real estate transactions. I will always fight to get the very best deal for my clients. When negotiating, it’s important to look at the big picture and be open to alternative ways to have a win/win situation.
Step 5: Closing Time
Once you and the seller agree on the terms and conditions, we’ll move forward through the closing process. This normally takes 25 to 45 days. I will help guide you through timelines as well as conversations to be had with your lender and the title company representative during this time.
- Submit earnest money deposit to the title company
- Home inspection and request repairs
- Finalize loan details with the lender
- Get the home appraisal completed by a licensed appraiser
- Buy Homeowner’s Insurance
- Get all of your paperwork completed with the underwriters
- A final walk-through of your home-to-be
- Submit a cashier’s check or wire funds for your down payment and closing costs
- Sign all required paperwork including closing disclosures at least 3 days before closing
When all your contingencies have been removed and your bank sends the money to the seller it’s time to sign the last remaining paperwork with the title company. After that, it’s time to pack your bags and move!