Buying a home is exciting. Stepping into a new space and calling it your own is a huge accomplishment that can be very rewarding. However, it may feel a little scary, especially if you are thinking about buying a house for the first time. The truth is, there are a lot of factors to consider before buying a house, and if you are unfamiliar with the home buying process, you may not know where to start.
Whether you are looking for your first home or your hundredth, it is important to be prepared and confident throughout the entire process. In this blog post, we will explain the entire home buying process in 8 steps so that you know what to expect and how to make smart decisions.
8 Steps to Homeownership
1. Find a real estate agent
First, choose a reputable real estate agent in the area you want to live in. Having an expert to guide you through the process is very important, even if you have bought a home before. There are several complex steps in a real estate transaction that must be handled carefully, and your agent will oversee these to ensure a smooth closing.
When you first meet your agent for a consultation, you should discuss your expectations about the home-buying process. Be honest about what you are looking for and what your timeline is. Before you start looking, it would be helpful to come up with a prioritized list of wants and needs in your next home so that everyone in your household is on the same page.
Your agent will also ask about the location, neighborhood, and amenities that you prefer. This will help narrow down your search so that you are not wasting your time in areas that do not meet your needs. Throughout the time you are working with your agent, be sure to ask questions about anything you don’t understand.
2. Talk to a mortgage lender
If you plan to finance your home with a mortgage, your next step should be to find a local lender. Your real estate agent can recommend experienced lenders that are right for your specific needs. For example, if you are a veteran, you will want to work with someone who can write VA loans.
Keep in mind, rates and fees may vary between lenders, so you may want to speak with two or three different lenders to compare your options. Typically, in order to assess your financial situation, they will ask you for documents such as pay stubs, tax returns, and bank statements. Lenders will also perform a credit check to determine how likely you are to pay back a loan. Once they have all of this information, they will help you decide what type of loan is best for you.
Additionally, be prepared to discuss interest rates, property taxes, and other costs that will affect your monthly mortgage payment. All of these factors will help you understand your budget for purchasing a home. When you and your lender agree on a budget, you will want to obtain a pre-approval letter that you can present to sellers as proof of your ability to finance the purchase.
3. Tour homes
Now, you are ready to tour homes! Your agent can help you find homes on the market that meet your wants and needs. You can also search for homes online and send the ones you like to your agent. As you begin touring homes in person, you may realize that some of your wants and needs have changed. It’s perfectly fine to adjust your criteria, as long as you keep your agent in the loop.
With each house you tour, take notes about the features, location, and things you like or dislike. This will help you understand and narrow down what you truly want. Remember to ask questions, such as the ones in our blog post, “8 things to ask before buying a home”
4. Make an offer
So, you found a house that you love, and you are ready to make an offer. First, you will want to discuss an appropriate price with your agent. Depending on how competitive the market is, the condition of the home in question, and what range other homes have sold for in the area, you may decide to offer more or less than the asking price.
Next, you will need to decide how much earnest money to deposit. According to One Closing Source, earnest money checks are typically between 1-3% of the purchase price, and they should be delivered within three days of entering into a contract with the seller.
Lastly, you should determine if your offer will have any contingencies. A contingency means that a certain condition must be met in order for the contract to be upheld. For example, you may wish to make your offer contingent on obtaining a loan.
Your agent will help you choose all of your options appropriately, fill out the property details, and submit the offer. Remember, you should only submit one offer at a time, and the seller may choose to accept, reject, or counter your offer.
5. Get a home inspection
Once you have an accepted offer, you are under contract! It is important to get an inspection performed on the home as soon as possible. Depending on the results, you may wish to negotiate repairs with the seller or lower the purchase price before moving forward. Even in newly constructed homes, an inspection can reveal issues that may potentially cost a lot of money in future damages. For more information about the importance of an inspection, read our blog post, “Benefits of a Home Inspection.”
6. Final preparation
You are almost finished! Before you can close on your home, you will need to address the results of the appraisal, which determines the value of the home. If the value comes in lower than the purchase price, you may need to negotiate for a lower price or come up with the extra cash. Our blog post, “What is an appraisal?” goes into more detail about this process.
Lastly, you should obtain a homeowners insurance policy, set up utilities, and schedule moving trucks and furniture deliveries. During this time, your lender will be handling the final details of your loan so that you can close on time.
7. Pack your stuff
With closing just around the corner, you should begin packing. If you need boxes, try asking your agent if they know of anyone who just finished moving and has extra. If not, you may be able to find free boxes at local stores. As you pack, you may want to purge your unwanted stuff so that you have less clutter and unpacking to do at your new house. Be sure to label boxes by type and the person they belong to. You can find more tips in our blog post about moving.
8. Closing
You made it! Closing day is here, and all you have to do is sign the official papers. Make sure you bring a valid ID and a check for the total amount due. After closing, you will officially own your home, and you can begin moving in. Your hand might be sore after all the papers you have to sign, but the excitement of being a homeowner will make it all worth it.
Welcome to Homeownership
Turning the key to unlock your home for the first time as the new owner is a special moment. Our agents at Sheridan Solomon & Associates know that homeownership is a huge accomplishment, and we are passionate about helping people like you achieve your goals. We would be honored to guide you through each step of the process, making sure your path to closing is successful and stress-free.
If you would like to work with us, please call or reach out on our website!