Competition among buyers in many markets has gotten intense, so if you’re serious about homeownership, you’d better get your act together. To point you in the right direction, Realtor.com has prepared a road map of the typical steps you need to be aware of during the home-buying process.
1. Choose an agent
The first step in the home-buying process is to find an agent you feel comfortable working with on what will likely be the largest financial decision of your life. Ask friends and family members for referrals, and interview several real estate agents.
2. Find a lender
Once you’ve chosen a real estate agent you trust to be your advocate, ask him or her to recommend lenders, either an organization or a person who will lend you money so you can buy your home. A local Realtor has experience working with mortgage brokers and title companies and can recommend lenders. Choosing someone to handle the financial part of the home-buying process can feel like a scary step, but choosing a lender that’s competitive on rates, communicative and available is key.
3. Clean up your credit
Now that you have a great lender, you can ask for guidance on any credit score issues you may be facing. Whether it’s a small or large problem, the lender can provide guidance to help repair your situation and make sure you’ll be approved for a loan.
4. Apply for mortgage pre-approval
A lender will help you determine exactly what you can afford, and therefore, which houses you should be considering. To arrive at a purchase price, you’ll factor in expenses such as homeowner’s insurance, association dues and utilities to make sure you can comfortably make your mortgage payments. The lender then will identify the total amount of money it’s willing to lend you.
5. Create a home wish list
Once you know what your purchasing power is, talk with your real estate agent about your ideal home. Come up with a few “musts,” as well as “wants” on which you’d ultimately be willing to compromise. For instance, do you want to be within walking distance of restaurants? Do you want space between you and your neighbors? Or is proximity to a good school the most important factor?
6. Search the listings
When you begin touring homes that are on your short list, take along a notepad and jot down your thoughts as you approach each home. Can you imagine yourself living there? Make sure to take note of what you like about each home.
7. Make an offer
Your real estate agent will walk you through the steps required to make an offer on a home in your area.
That offer likely will include earnest money that will apply toward your down payment on the home and may include contingencies such as hiring a home inspector. Expect some negotiation, and discuss a competitive offer with your agent.
8. Get final mortgage approval
Once your offer to purchase is accepted, you’ll work with your lender to get final approval for your home purchase by the date specified for the closing. The lender may require you to pay property taxes or homeowner’s insurance for the first year at the time of closing, so make sure you know what funds will be expected. Be sure not to make any major purchases until after closing, especially if you’d be using credit, because that can affect your mortgage qualification.
9. Do your due diligence
The due diligence process usually includes getting a home inspection to make sure you haven’t missed any hidden problems on your walk-throughs. If issues are found, negotiate for the current owner to fix them or take the cost of repair off the closing costs.
10. Attend the closing
Once all of the above steps are completed, you’ll be on your way to the closing table. This is when the deed to the home is transferred from the seller to the buyer. Every transaction varies, but plan to sign a ton of paperwork. An attorney or settlement agent will guide you through the process. Then you’ll officially be a homeowner and receive the keys to your new home.
