Your Comprehensive Homebuying Checklist: A Step-By-Step Guide

Buying a home marks a significant milestone, particularly for first-time buyers. With so many steps involved, it can feel overwhelming. So, we created this comprehensive homebuying checklist to guide you through the process so your purchase can go as smoothly as possible.

A Homebuying Checklist Can Help

According to Statista, about 99 percent of homebuyers between the ages of 24 and 57 used the internet to find homes. But beyond a quick internet search, there are plenty of steps to consider. A detailed checklist can help streamline your journey, keeping you organized and informed at every step.

Understanding each step of the homebuying process is crucial, particularly when it comes to getting the right mortgage. With PacRes Mortgage, we’re here to provide expert guidance and support, ensuring you find the perfect loan for your particular needs and specific budget.

Step 1: Determine Your Budget

Understanding your budget is a big piece of the homebuying puzzle. It narrows your search and helps you stay focused on realistic options. Starting with your DTI, or your debt-to-income ratio. It’s based on your debt (revolving & Installment payments) divided by your gross income. If your ratio is over 43% that may be too high for lenders to work with you. There are programs that will allow a higher ratio than 43% but, it may come at a cost. Work towards eliminating some of your debt or increasing your regular income to improve your ratio.

SAVE FOR A DOWNPAYMENT
If you’d like to avoid private mortgage insurance and the fees that come with it, attempt to save 20% of the home cost for your down payment. You’ll end up saving money on interest by putting more money down, and you’ll be a more attractive borrower for lenders, since their risk will be lower with your loan.

RELATED: How to Get a Mortgage While Building Credit: Tips for First-Time Buyers

Step 2: Get Pre-Approved for a Mortgage

To understand your borrowing capacity, you’ll need a letter of pre-approval. This helps show sellers that you’re serious and financially ready. Plus, you’ll be able to see if there are problems with your financials or credit before you do the hard work of house hunting. Another added bonus: Your closing process may be quicker because you’ve done the hard work upfront.

GATHER FINANCIALS
Get together the documents that show your income, assets, employment, credit, and identity. Provide them with your pre-approval application to a lender (or to a few if you haven’t selected one yet).

OBTAIN PRE-APPROVAL AND CHOOSE A LENDER
Get the letter of pre-approval and note your maximum loan amount. This is the best guide for your budget, but remember that you don’t have to purchase a home that goes all the way up to the amount you’ve been pre-approved for. A home with lower costs can make for a more comfortable budget with a lower monthly payment.

After receiving your pre-approval letters, choose the lender that offers the best rates or service. Keep in mind that your pre-approval letter is only valid for 60-90 days, so work on finding a home within that window, or you’ll need to go through the pre-approval process again.

Step 3: Find a Real Estate Agent

An experienced real estate agent can guide you through the homebuying process. They’ll help you stay focused on the tasks you need to accomplish and the steps you’ll need to take. Once you enter the buying process, they’ll guide you through closing. A great real estate agent will be communicative and can offer advice on prices and neighborhood trends while also being able to walk you through the mortgage and pre-approval process, the negotiations and possible bidding wars after making an offer, and the closing process once your offer is accepted.

RELATED: Navigating Interest Rate Changes: How Realtors Can Help Clients Plan Ahead

Step 4: Start House Hunting

This might be the most fun part: searching for a home that meets your criteria. Make a list of your needs, wants, and nice-to-haves. Stay flexible, and spend time going to open houses, scheduled viewings, and keep a list of properties that stand out—if you end up seeing a lot of homes, they may begin to jumble together, and you’ll want to be sure to note what you like (or don’t) about each. Your real estate agent will have access to the listing sites for homes with all the details you’ll want to know about the properties you’re viewing.

RELATED: The Significance of School Districts When Buying a Home

Step 5: Make an Offer and Negotiate

Once you find the home that works for you, contact your agent and work on an offer. The agent can help ensure you make a competitive offer. The seller could accept or reject your offer. Or, it’s possible they’ll send a counteroffer—like haggling at a market, but with much bigger amounts. Your real estate agent can help you counter their counteroffer and try to land on a figure you can both agree upon. If the amount doesn’t get settled, you can walk away. Also, note that you may end up in a bidding war with other buyers in a hot market.

Quick reminder: Getting your pre-approval done will help your offer stand out among the competition.

Step 6: Get a Home Inspection and Appraisal

HOME INSPECTION
Once your offer is accepted, you’ll need to have a professional inspector to assess the condition of the property. This is to uncover any repairs needed for the home and to help you negotiate any price adjustments if needed. Though you’ll pay the cost of the home inspection, any issues uncovered could give you a reason to request either seller concessions or a reduced price to put towards the fixes or improvements necessary. It’s usually a good idea to have a home inspected since it will help you determine whether you’re investing the right amount of money on the property.

APPRAISAL
An appraiser will look at comps (comparable nearby homes sold recently) to determine the value of your home. If the valuation comes in lower than the selling price, you will either have to fund the difference or see if the seller can come down to meet the home's appraised value. If the appraisal and sale price don’t align with your funds or the seller’s drop in sale price, the sale won’t go through.

Step 7: Finalize Your Mortgage and Close the Deal

FINAL APPROVAL
Once the inspection and appraisal come through, you’re ready to finalize your mortgage application. After providing your documentation to verify income (paycheck stubs, bank account statements, W-2s, and tax returns) and your credit is pulled by the lender (from all three credit agencies) to solidify your interest rate and loan availability, all that’s left is to review and sign the loan agreement.

CLOSING MEETING
At this point, you’ll schedule a time and date with your lender to come in and sign everything you need to finalize the purchase of the home. You’ll need to pay any remaining closing costs along with your down payment at this meeting. Bring the following to the meeting:

• Identification

• Cashier’s Check for closing costs

• Closing Disclosure

• Proof of Homeowner’s insurance

Step 8: Move in and Celebrate

Once all the paperwork is signed and the deal is closed, you can move into your new home.

The homebuying process is always easier when you have a checklist to go with it. At PacRes Mortgage we’re happy to be by your side every step of the way. Reach out for help with your pre-approval and loan questions—we’re here to help you secure the home of your dreams.