So you are considering buying a house?!
Whether you are a current renter, first time home-buyer, or an old pro at the home-buying process…it can be a bit overwhelming. We are here to help you with that! Take some time to familiarize yourself with the process and take it step-by-step.
Step One: Start Saving
Most buyers will require a mortgage in order to purchase a home. Lenders are happy to loan you the money but will require some form of down-payment. Traditionally, the down-payment requirement is 20% of the loan amount – this saves you added fees and usually gets you the best loan deal. However, there are several loan programs out there with down-payments as low as 0%.
Buying a home also includes closing costs associated with the transaction. In our current market the Seller typically pays the real estate commission, but there are still Buyer costs in the transaction. In general, these Buyer costs run about 3% of the purchase price.
But don’t panic! There are loan and closing cost options that can help get you into your new home without draining all your savings. The important thing is that you START SAVING now!
Step Two: Find A Lender
Our expertise is in real estate…sure we know a bit about the mortgage world since we deal with mortgages in most of our transactions, but we leave the financing part to the lenders – they are the loan experts.
Now that you are saving some money for your down-payment and closing costs, you need to review your loan qualifications with a lender. They will evaluate your finances and let you know the type and amount of loan for which you qualify. When evaluating your finances, lenders will need to dive into your credit score, debt-to-income ratio, assets, income, etc. You can use tools such as the Affordability Calculator to see what you might be able to afford, but speaking with a lender is the absolute BEST way to get started…and it doesn’t cost anything. If you don’t like the loan type you qualify for, don’t qualify for an amount large enough to get the home you want, or just want to wait until you have a better financial history before moving forward, a lender can help you with tips for increasing credit score, etc. Remember, lending/mortgages is what they do…let them help you get pre-approved (basic) or pre-qualified (in-depth) for a loan that best suits YOUR needs. It is best to speak with three lenders as each may offer different programs. We recommend that you check with the bank where you currently have an account, speak with a mortgage broker, and try an online lender. That way you are approaching the mortgage world from three different perspectives.
We have a great list of lenders…contact us anytime and we will send you that information.
Step Three: Contact Us!
We are here and ready to help find the right home for you. As your Realtor® we will guide you through the home-buying process and be by your side each step of the way. As I mentioned before, the Seller traditionally pays our commission, so you may as well put us to good use. Not sure exactly what we do for you…check it out.
Step Four: Start Searching
We know you are going to use Zillow, Trulia, Realtor.com, and all other available internet resources available to you…and we encourage that you do. However, keep in mind that those sites are often not accurate. Other times they don’t have enough information about a listing to let you make an educated decision in a search criterion. But we don’t want you to miss out on a possibility…so please use those tools.
However, put us to work for you as well. We have access to the most up-to-date information out there. We can set you up on a search directly from our MLS (where we get our information) and we can get you set up with your own Century 21 account where you can search directly from our MLS. With all the information out there now, we need to work together to help you find the right home! Once you find it, we will get you in to tour the property and get all of your questions answered. And we will do this on as many properties as you need to in order to find the right one. Note: most Sellers require that you be pre-qualified or pre-approved before allowing you in the home for a tour.
Even if you aren’t quite ready to purchase, it never hurts to get the online search started. You can keep an eye on the market, get ideas on properties, become acquainted with communities, and give you the time to learn along the way before you make your big purchase.
Step Five: Make an Offer
You found “the one” and now it’s time to make an offer. While the Seller does deserve to get paid a fair amount for their property, you also deserve to pay fair market value so you can gain equity in the property. We will look at comparable sold properties and make sure that your offer amount (and ultimately the sales price) is reasonable. However, there are a lot of considerations when making an offer besides just the amount. We want to make sure everyone is protected during a transaction, so things such as an inspection period, financing contingency, appraisal contingency, HOA addendums, etc. may need to be included in the offer.
As Realtors® we will do everything we can to get you a good deal on the right home for you!
Step Six: Under Contract (your offer was accepted)
Once your offer is accepted, you are now Under Contract to purchase a home…this is when the timeline starts. Typically, a closing will occur 30-45 days after the offer is accepted. During this time, there are several items that must be done. We will provide you with a timeline to keep us on track and guide you through the steps. But, the first step is the Home Inspection. This is not required, but we STRONGLY SUGGEST that you have a home inspector of your choice conduct a home inspection. Sellers are required to disclose any material defects of which they are aware, but there can be items of concern that Sellers are not aware of. This home inspection is your time to get the home checked out top to bottom so you know what you are getting into.
Another vital step is the Home Appraisal. If you will be getting a mortgage, your lender will require and order the appraisal – if you are paying cash, you will need to order it yourself (we can help). Either way, the appraisal is important as it determines the market value of your home. As Realtors® we evaluate market value in the form of a Comparative Market Analysis (CMA). This is an overview of the market value based on limited information. Appraisers are further trained in determining value and use more detailed information to determine the value of the property. Lenders want to ensure that they are not loaning more than the home is worth.
If you have a loan, you will receive the Closing Disclosure (CD) providing the financial details of the transaction three days prior to closing. Take time to review this document as you will be signing it at the closing table.
During this time under contract and heading towards closing, we will be by your side guiding you along the way and keeping you on track to ensure a smooth process!
Step Seven: Closing
Woohoo! The timeline has come to an end and you are now headed to closing. The title company will have made arrangements with you to wire the funds due at closing 2-3 days prior. So you are now sitting at the closing table with us (your agents) and the closer. Sometimes your lender and/or the Seller and their agent may be there as well. Either way, you will have a stack of documents to sign and then you will get the keys to your new home!
Step Eight: You’re A HOMEOWNER
CONGRATULATIONS! You are now the proud owner of your own home! Hopefully you now agree that the home-buying process wasn’t so bad 😊 Check out this MUST-DO LIST for tips on what to do now.
Step Nine: Refer Us
Our business thrives on referrals from our family, friends, and customers. Without you guys, we wouldn’t have a career! If we have done a good job for you (or hopefully a GREAT job), please let people know. Share our Facebook page, give us a shout out on Social Media, tell your new neighbors about us, give our information to your colleagues, and help us get our name out to the community!