Buying a home is one of the most exciting milestones of your life. To prepare yourself for this moment, you need to know what to expect during the process. This step-by-step first time buyer’s guide will help reduce the stress of buying a home and help you enjoy the journey as much as possible.
Buying a home is one of the most significant purchases in a lifetime. It is essential to have an experienced agent in your corner, always looking out for your best interest. A buyer agent’s fiduciary responsibility is to represent the buyer and to ensure that they are protected.
After all, a seller has someone in their corner. A listing agent has an allegiance to the seller. Their goal is to get the seller top dollar for their home. There is incredible value in having someone working for YOUR best interests when buying a home.
How Much House Can You Afford?
Mortgage lenders recommend you do not buy a home that is more than 3 to 5 times your annual household income. If you are not purchasing a home with cash, you will need a mortgage pre-approval provided by your mortgage lender. A lender will work with you to get a loan that meets your needs. Some buyers are concerned with keeping their monthly payments as low as possible, others want to make sure that their monthly payments never increase.
Check Your Credit
Save Cash for a Down Payment & Other Expenses
In order to make your dream of buying a home a reality, you will need to save cash for your down payment, earnest money, closing costs & home inspector.
Being pre-approved, unlike being pre qualified, means you've actually been approved by a lender for a specific loan amount. You will need to provide documented financial information (income, statements, assets, debt & credit reports etc.) to be reviewed & verified by the lender.
Time to start shopping! We will take notes on all the homes we visit. It can be hard to remember all the details of each home, so take pictures or videos to help you remember each home, and review the notes you have written. Once we have found THE house for you, we will present an appropriate offer based on recent sales and current buyer activity in the area, as well as the value of the property in its current condition. Negotiations may take place after the offer is presented.
When to Make an Offer:
So you have found THE house! Congrats! In today’s market when the demand is higher than the amount of homes available it is important to act fast!
How Much to Offer:
We will sit down and look at recent sales and current buyer activity in the area, as well as the value of the property in its present condition. Putting all this information together, we will determine the price that you would like to offer.
Submitting an Offer:
The Seller Could:
Offer is accepted. Congrats!
You will sign the purchase agreement and you are now officially under contract! This period of time is called the contingency period. Now inspections, appraisals, or anything else built into your purchase agreement will take place.
During the inspection period, we will schedule an inspection with a reputable home inspector to do a thorough investigation of the home. Once this is complete, the inspector will provide us with a list of their findings. You can take the issues as-is or request the seller to address some or all of the findings. We will be mindful and reasonable on smaller items while being very cautious and vigilant of potentially significant issues.
Issues typically arise after the home inspection, and those issues tend to result in another round of negotiations for credits or fixes.
1. Ask for credit for the work that needs to be done.
Likely, the last thing the seller wants to do is repair work.
2. Think “big picture” and don’t sweat the small stuff.
A tile that needs some caulking or a leaky faucet can easily be fixed.
Repairs are still up for negotiation and perhaps a small credit would help with closing costs.
3. Keep your poker face.
The listing agent will be present during inspections and revealing
your comfort level with the home could come back to haunt you in
further discussions or negotiations.
Your lender will arrange for a third-party appraiser to provide an independent estimate of the value of the house you are buying. The appraisal lets all parties involved know that the price is fair. The loan file then moves on to the mortgage underwriter. If approved you will receive your final commitment letter that includes the final loan terms & percentage rates.
Property title search
Home owners insurance
Closing is when you sign ownership and insurance paperwork and you receive your new home’s keys! Typically, closing takes four to six weeks. During this time, purchase funds are held in escrow, where your money is held safe until the transaction is complete.
Lenders are required to provide you with a closing disclosure, at least three days before closing. This will show you what your final loan terms and closing costs will be. You will have three days to review the statement. This is done to ensure that there are no surprises at the closing table. If there is a significant discrepancy between the loan estimate and the closing disclosure, we must notify your lender and title company immediately.
We will do a final walk through the home within 24 hours of closing to check the property’s condition. This final inspection takes about an hour. We will make sure any repair work that the seller agreed to make has been done.
The closing typically happens at the title company. You will be signing lots of paperwork so get your writing hand warmed up! Some of the papers you will be signing include: the deed of trust, promissory note, and other documents.
Closing costs can vary depending on your home’s purchase price and where you are located. You can generally expect your closing costs to be around 3% to 4% of the home’s sales price. These closing costs can sometimes be shared with the seller.
- Government-issued photo ID
- Copy of the sales contract
- Homeowner’s insurance certificate
- Proof of funds to cover the remainder of the costs
Congratulations! It was a lot of hard work but you are now officially homeowners!! Time to throw a party and get to know your new neighbors!
After signing the final paperwork to complete the purchase, you are now the owner of a new house. It may take a few days for your loan to be funded once the paperwork has been returned to the lender, but once that check is delivered to the seller, you’ll be all set to move into the home of your dreams.
Whether you're buying, selling, or investing, let's start the conversation. Connect with Lisa for a real estate experience that goes beyond expectations.
