The Definitive Guide to the Home Buying Process
When you are in the process of buying your first home you should know all the steps to do so. Homebuyers have many questions about what happens next and there are numerous actions that need to be taken for closing day.
I have put together the following article and will explain everything necessary to get through the entire home buying process, and how we help you along each step.
Financing / Pre-Approval
The first step is to get pre-approved for a loan. You should meet with your bank or lender and discuss how much you are comfortable spending per month, the size of a home that will be affordable for you in this price range, and many other important details. This is one of the most crucial steps in buying a house because it is a lender’s job to ensure that you are financially able to purchase a house. If you are not, then there could be trouble with closing on time and might result in needing additional money.
Getting pre-approved for a loan can be a huge help when it comes to financing your dream home. Whether you are buying new construction or existing real estate, pre-approval for a loan can make the process go much more smoothly and efficiently.
First, you need to make sure that your loan application is accurate and complete. This includes providing verification of all income sources as well as an explanation for any debts still owed. If there are late payments or other blemishes on your credit report which should be explained, now would be the time to do it! The more thorough you can be with your documentation, the more quickly you can expect to receive a loan pre-approval.
Usually, it only takes about 24 hours for an initial response from a lender after they have received all of your information and run their credit report. Once this is done, the lender will inform you that you are either approved or denied for a loan. If you are approved, they will also let you know what your interest rate and monthly payment would be.
You might even want to try a few different lenders in order to get the most competitive rates possible for your home loan. Get pre-approved for a loan from multiple sources before starting your home search process so that when it comes time to make an offer, you are that much further along in the process. This can help to expedite your home buying experience and get you into your dream home just a little bit sooner!
Things to Consider When Obtaining Financing:
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- Your monthly mortgage payments
- Your debt to income ratio
- Your Credit Score
- Your Down Payment
- Your monthly payments
- Your monthly debt
You Down Payment is Important!
Your down payment amount will determine your monthly mortgage payment. With a larger down payment, you will save money on your monthly loan payments. Securing financing in a competitive market, whether a conventional loan, FHA loan or personal loan, is extremely important. Maintaining a good credit score is extremely important to your mortgage lender and can affect your home’s purchase price.
Finding Your New House
The next step after getting pre-approved is going out looking for houses! This can also take some time depending on what kind of house you are looking for. If you are only searching in a specific area, then it might take a while to find a home that meets all your expectations and fits into your budget. There should be some criteria set so that you have something specific to search for.
Finding a house is not an easy task. You have to be willing to search through listings and drive around neighborhoods you never knew existed. It’s enough to discourage anyone from even starting the process. But it doesn’t have to be that way if you follow these few simple steps that will help your search go much faster and smoother than it would otherwise.
Decide Which House Type Is Right For You
Whether you’re looking at condos, townhomes, or traditional single-family homes, it’s important to first determine what your priorities are. Are you on a budget? If so, look for houses that offer the amenities and features necessary without going overboard. How much house can you afford? Do you want something with recent updates including new flooring, paint, and appliances? If so you’ll want to look for homes that have been recently renovated.
Start Your Search
Now it’s time to get out there on the road! Start your search by looking at listings online before heading over to see them in person. Take note of what catches your eye immediately as well as what doesn’t. If you’re seeing a lot of homes that are either too expensive or don’t offer the features you want, start widening your search parameters. Instead of looking in only one area, now look at listings across multiple towns or cities if need be. You might even consider starting to look outside the town where you currently live as well as neighboring communities.
How To Handle Open Houses
When you head out to open houses, make sure not to do it alone! You’ll want at least one other person along to give their input and help with negotiations if needed. Remember that this is the first impression that a house makes on potential buyers so take note of everything from the exterior (landscaping, parking) to the interior (upgrades like stainless steel appliances, countertops). If you don’t know much about homes or renovations talk with your real estate agent to get their input before making any decisions.
Making an Offer on Your New House
Once you’ve found the right house, it’s time to make an offer for your new home purchase!
You should always ask for financial information about the seller such as income and credit history to determine if you can make a fair offer. It is also important for your real estate agent to draft an agreement that includes all of the specifics of what you’ll be offering including purchase price, terms and conditions (such as inspections), closing date, and any other contingencies (such as financing).
Once you’ve submitted your offer, it’s time to wait. In a hot real estate market, this might not be so bad as offers are flying left and right but if there is less activity around the home you may have some waiting ahead of you.
If an offer comes in over yours but under what the seller was originally looking for, they may choose to counter your offer. This is when you and the seller negotiate back and forth on terms until a final agreement has been reached.
If there are no other offers, it’s likely that this negotiation will be much easier as the sellers only need to make sure they’re receiving fair market value for their home.
Once an agreement has been reached and all of the contingencies have been met, it is important for your real estate agent to draft an agreement that includes all of the specifics of what you’ll be offering including purchase price, terms, and conditions (such as inspections), closing date, and any other contingencies (such as financing).
Making an Offer on Your New House is a big step, and should always be done with the help of your lawyer. They will ensure that you get every last detail right to protect yourself from any future issues.
After you have written out all the details in an offer, it is time for negotiations! Negotiations can often take up to weeks or even months before they are completed.
You may choose to go the offer route with your negotiations or you can ask for different offers. There are many things that can be negotiated, so if there is something in particular you want, try to negotiate it at this time!
Home Inspections
After making an offer, then comes time for inspections!
The home inspection will determine what repairs need to be made ahead of closing day and if the house will need any additional work once you take ownership of it.
You can ask your real estate agent to find out if there are any comparable listings nearby so you have a better idea of how much repairs could cost, but they may be somewhat expensive depending on the severity of everything that needs fixing.
If repairs are too costly, you can also ask the seller to split them with you or give back a certain amount of money after closing day.
The home inspection is often one of the biggest pieces in making an offer on any property and it should be taken seriously for several reasons; if there’s something that needs immediate attention like mold or foundation issues, you could lose out on the deal or even be sued for not disclosing it to the buyer. On top of that, if there are any repairs needed before moving in and they’re done incorrectly, then you will have to pay more money when finding a contractor yourself later down the road.
Having a home inspection done before you buy a house is not only a good idea for you, but it’s also necessary to ensure that the deal doesn’t fall through. It will not only make your offer more appealing, but it can save you thousands of dollars in repairs and/or other problems down the road like mold or foundation issues which could end up costing much more money than what a simple inspection would cost.
The home inspection is an important piece to buying a house. It will determine what repairs are needed ahead of closing day and if the house will need any additional work once you take ownership.
Home Appraisal
Next comes time for the appraisal! The lender will hire an appraiser to come and look at the house that you are planning on buying so they can determine if it is worth as much as you paid for it.
What is a Home Appraisal?
A home appraisal is a real estate process that is important for home buyers. Some people do not realize the benefits of Home Appraisal until after they have been through this procedure themselves.
Appraisals are done to figure out what a property’s worth, and it helps determine whether or not you can afford your dream house.
The Home Appraisal Process
Let’s take a look at the home appraisal process and what it entails.
The appraiser will examine the house inside and out, including your property taxes. They may even do a video walk-through of the exterior to make sure that everything looks like it is in order.
The home appraisal process is the detailed evaluation of your property to determine its market value for a specific purpose. It can also be known as “appraisal review”, which is another way to check the accuracy of the valuation results. If you are thinking about selling or refinancing your property, it is necessary to have an appraisal done.
Appraisals are also required when you want to take out a mortgage if the value of your home exceeds 80% of the amount that will be financed or refinanced. The lender wants assurance about how much they are lending on the house before writing up documents for financing purposes.
For whatever reason you are getting an appraisal, it is important to have this done by a qualified and experienced home appraiser.
When deciding whether or not to get your property appraised, there are many factors that need to be considered. If the value of your house exceeds 80% of what you would like to borrow against your equity, then it is a good idea to have an appraisal done.
Additionally, if you are selling your property and have found a buyer, the appraiser will determine how much money needs to be brought in after all fees and taxes are paid.
One thing people often forget about until it’s too late is that there may be special considerations due when getting their home appraised. If you have a unique situation, it is important to tell your appraiser about this before the appraisal process begins so that they can take any necessary steps for accurate results.
Closing Day When Buying a House
Finally comes the closing day!
It’s the day you get to take possession of your new home. It is an exciting time, but there are things that need to be done before closing on a house in order for everything to go smoothly.
You need to make sure you get a copy of your settlement statement from your lender and keep it for your records. Also, take some time before the close date to go through everything in your home again with an inspection checklist so that nothing gets overlooked. This is also a good time to make sure you have all your moving supplies and boxes packed up.
You may also want to contact the utility companies of electricity, gas, and water for them to turn on or off services at closing. If you are using a mover, then this is their job as well. Be present during closing so that nothing slips through the cracks.
Your Monthly Mortgage Payment
The average mortgage payment is $1,121 according to industry research. And this isn’t just an arbitrary number pulled out of thin air; this figure is based on historic data from actual mortgages taken out across the country. This means that if you want a 30-year fixed-rate loan with a 20% down payment at 4% interest, your monthly payment will be $1240. Be mindful of interest rates.
This is obviously helpful information to have, but with so many options out there it can also be confusing. The best way to figure this all out is by working with a professional. They’ll help you find the right loan type and ensure that you get the most competitive interest rate.
Some lenders will require a minimum down payment, so making sure you have enough money can put you in a better position than other buyers. Always understand your loan details.
Finding the Right Real Estate Agent
Real estate agents are a dime a dozen. Finding the right one can be a challenge. Do you need a seller’s agent? Do you need a buyer’s agent? What’s the difference? If you are a serious buyer then spending some time searching for real estate agents can be time well spent.
Additional Items to Consider for Your Real Estate Transaction
Buying a house is a journey. Here are few other costs you don’t want to forget about during the homebuying process.
- Closing Costs
- Private Mortgage Insurance
- Homeowners Association Fees
- Unexpected Repairs
- Interest Rates
In Conclusion
These are all of the steps necessary if you want to buy a house, and we hope that this article helped everyone better understand what they can expect during such an important process in life!
Feel free to contact us if you have any questions about buying or selling a house.