Congratulations on your decision to buy a home! The home buying process can seem daunting, but with the right information and guidance, you can do it. Here are the 10 steps to buying a home:
Before you begin the house buying process, you’ll need to locate a bank. You may speak with your existing bank or seek a bank that offers the best interest rates on home mortgages. Many homeowners choose to get a home loan from their present financial institution, but local credit unions may also be an excellent alternative. There are also a lot of alternatives for you if you’re looking beyond a conventional house loan, including FHA, USDA, and VA mortgage loans, which we’ve covered in our article on home mortgage loans.
Ultimately, you want to find a lending partner you feel comfortable with and one that has clear communication about their lending process. The home-buying procedure may get complicated, and having a lending partner as a resource might make all the difference between an excellent or terrible experience.
Once you’ve decided on a lender, the next stage is to figure out how much money you can borrow for your home purchase. For a deeper look, visit our post on Pre-Qualification vs. Pre-Approval.
The first stage of the mortgage loan application process is known as Pre-Qualification. To begin, you’ll need to submit basic income and financial details to your lender. It’s vital to note that a pre-qualification letter is simply an estimate of your purchasing power. In the following phase, the bank will have to do a more detailed study of your finances.
Pre-Approval is the step that serves as the go-ahead for making offers in a seller’s market (like we’re experiencing now).
Pre-approval is an official stamp from your lender on the loan amount they would be willing to finance and the possible interest rate they will offer before you apply. To receive pre-approval, a hard credit check and a thorough examination of your finances are necessary. Your lending partner will explain how much down payment you may put, your debt-to-income ratio, and what your anticipated monthly mortgage could look like.
A pre-approval letter from your lending institution carries weight with realtors and home sellers as well as other professionals involved in closing the transaction (i.e., title, home insurance, etc.). It tells all parties that the financial picture has been carefully scrutinized by an expert and if we use their loan program the transaction will be successful.
Once you’ve been pre-approved, it’s time to start talking with a real estate agent and viewing houses!
One of the most important steps in this whole process. This is where you’ll need to find a real estate agent to walk you through the whole process of buying a home. If you’re looking for a deeper dive into finding a good agent, read our guide here.
To help narrow your search for an agent here are some key things to look for:
To discover the ideal applicant, we recommend meeting with a few agents in your region and schedule consultations with each of them to see who is the best match. It’s fine to ask them questions about their experience and request each one to walk you through the home purchasing process. This may seem like a waste of time, but it can help you identify the greatest candidate.
A good real estate agent will work tirelessly to help you find your dream house. The bottom line is this: a home purchase might be one of the most stressful moments in your life, and you’ll want someone who understands your issues and can assist you by using their expertise and experience to help meet your home buying goals.
Once you’ve received your pre-approval letter and your agent is prepared, it’s time to start looking for a house. This procedure should be collaborative, with everyone involved seeking houses to view. Your agent will use their knowledge and contacts to locate several potential homes for consideration.
You can look yourself on listing sites like Zillow or Realtor.com, if you’re local to Northern California then check out buying tools. Regardless of how you find a listing you like, always remember to send it to your realtor, it’s their responsibility to set up showings and provide vital feedback on the property.
When looking for a home, it’s vital to select the right house buying framework. Keep in mind that you won’t get everything on your list; but if you can prioritize 2-3 “must-haves,” you’ll be able to filter through houses with ease. Look at as many properties as possible that meet these criteria and work with your agent to evaluate potential problems, pricing, and particular details that may prevent a property from being worth your time.
When you’ve found the ideal house and are prepared to move forward, your real estate agent will assist you in preparing an official offer. What you offer will be determined by your budget, current market conditions, and the value that you think the property is worth. This is a crucial moment for your real estate professional, and their expertise should come through here.
You have many weapons in your arsenal to acquire a home: the offer price, down-payment amount, escrow period, offer response time, inspection waiving, and closing costs are all factors you may play to your advantage. It’s critical to collaborate with your agent as soon as possible and pay attention to their suggestions.
Once you’ve decided on a final offer, it will be sent to the seller’s real estate agent. They may accept the offer right away, but often there is a negotiation period.
Your agent should serve as the link between you and the sellers. That means any requests or counters (inspection removals, timetable modifications, etc) will go through your agent, and you will ultimately have to make the decision. Some sellers may receive numerous bids and contact your agency to check if you wish to increase your bid to compete. Some negotiations surround the length of the escrow period (more on that later) to accommodate a quicker sale. Sometimes the negation ends with either party walking away, some are more drawn out processes requiring multiple rebuttals.
A competent agent will explain all of the owners’ demands to you so that you can make the best decision possible. Lean on your agent, ask them questions, and only do things that are comfortable with you. Once both parties agree to an offer you can move to the next step: Inspections!
Inspection is a multi-step process but all of them are designed to help us find out whether the home is in good shape or has problems that could affect the transaction. For a deep dive into all the inspections that could come into play, read our Guide to Home Inspections.
Typically the home buyers will have a period to schedule professional home inspections and comb through the results. Some purchasers choose to skip the inspection stage of a real estate transaction, which is quite risky. A house may be hiding serious problems or safety concerns that might cost you tens of thousands of dollars to repair. Another key reason for an inspection is if something goes wrong after closing, it might be very difficult to get your money back from a seller who claims they were unaware of an issue.
A general home inspection covers all the major systems including:
If the inspectors discover a major concern, they may also recommend you hire a professional to perform more research, such as a roofing contractor or electrician.
The closing can take place at any time after the inspections are finished, and the purchasers may demand that certain issues from the inspections are addressed or credits are given to cover the expenses of prospective repairs. These credits typically come out of the home’s closing costs, but that may also be negotiated. Typically once the buyers submit these requests the sellers can respond with a counter, they can accept or all parties can walk away from the transaction. As before, it’s critical to contact your agent and inspectors to ensure you fully comprehend the ramifications of anything you discover before proceeding.
When all of the inspections are completed, it’s time for your lender and the title company to finalize the deal.
The bank, or mortgage provider, will need to double-check that nothing has altered since the loan was first approved and accept all of your conditions before giving final approval for the loan. This is also the time when your mortgage lenders expect you to make a down payment. You’ll also meet your title firm at this stage.
A title company is an organization that works with both the sellers and purchasers to ensure that the transaction goes through and records the change of deed for buyers and sellers. They are also in charge of holding your cash in a third-party escrow account on everyone’s behalf. This allows every participant to feel certain that the deal will go through and be completed successfully.
When your loan is at 100% or you have completed all of the contingencies, it is time for the final walk-through.
Before you take ownership of the property, you’ll conduct a last walk-through to ensure everything is in order. Until now, the seller has been in charge of the house, so anything that goes wrong between inspections and the walk-through is their responsibility. Once the final walk-through is completed, it’s up to your lenders and title companies to complete the escrow.
After the closing of escrow, your agent should hand over the keys and you will finally have legal ownership of the property. You should receive all transaction paperwork by mail, including title/deed, and home warranty information, within a few weeks. Once everything is completed, it’s time to congratulate yourself since you are now a homeowner!
Knowledge is the key to a successful real estate transaction, whether you’re buying a home for the first time or expanding your real estate portfolio. If this article has provided you with some helpful information about purchasing a home, please don’t hesitate to contact us! Our staff of licensed brokers is eager to assist you at any step of the way.
