The Ten Steps of How to Buy Your Dream Home
Buying a home is a very exciting event in your life, especially when it’s your first home. What should you expect as part of your home buying process? We’ve broken it down into ten simple steps, so you know exactly what to expect throughout the process.
Pre-approval—How Much Can I Buy?
Assuming you will need to finance your home and don’t plan on paying for it up-front with cash, the very first step in your home buying process should always be pre-approval. Pre-approval is important because it tells you how much you are qualified to borrow. You’ll also know that you are approved to get a loan. Without a pre-approval, you might wind up shopping for more home than you can afford. You could also wind up in the unfavorable position of having an accepted offer on a home, only to find out that something from your credit or employment history has thrown a wrench in your ability to close the loan. Problems like that could lead to you losing your earnest money deposit as well as your offer on your dream home.
Location—Where Should I Buy?
Once you have your pre-approval in hand, the next step in your home buying process is to figure out where you want to buy. You probably already have a basic idea of what city you want to live in, but now it’s time to think further into it. What neighborhood characteristics are important to you? Do you need your kids to stay in the same school district as your current residence? How important is your proximity to your employer, your church, a grocery store, your favorite park, etc.? Similarly, you should compare urban vs. suburban areas. Urban locations are in the city, generally with closer access to activities, cultural experiences, and restaurants. Suburban locations are typically less expensive than their urban counterparts and tend to offer larger homes and yards.
Type of Home—What Should I Buy?
In addition to location, you will also need to consider what kind or type of home you want to buy. The most common home types include single-family residences, condos, townhomes, manufactured homes, and 2-4 unit homes. You should think about how much space you and your family will need, both inside and outside the home. If you have pets, or plan on having pets after you move, do you want a yard? Likewise, do you want to maintain a yard, or have an HOA take care of that for you? Does the home have sufficient room for your family to expand if that’s in your plans?
Real Estate Agent—Who Can Help Me Buy?
Now that you know what type of home you want, and where you want to buy, it’s time to select a real estate agent. There are several ways to go about choosing an agent, but an easy way to start is by asking for referrals. Your Mortgage Advisor will have someone in mind, and you can also ask your friends and family who they’ve used on their transactions. Once you have a few names, you should meet with your prospective agents and figure out who you want to move forward with. Some things you should keep in mind when you choose your agent include:
- How long has your agent been working in real estate?
- Does your agent primarily work on the selling or the buying side?
- Is your agent familiar with the area you want to live in?
- Does your agent have a team or do they work alone?
- Is the communication between you and your agent a good match?
Shop For A Home—What’s Available For Me to Buy?
Your real estate agent will help you accumulate a list of prospective homes available in your target neighborhood, and you’ll go to each home for a preliminary tour. This might involve going to open houses, or you might go on a private tour. This is often the most fun and engaging part of the home buying process.
When you’re in each house, you’ll want to take notes of what you like, what you dislike, and things you’d want to change. Your agent will typically point out some observations while you’re in each home as well. Pay attention to things like how much of the outside noises carry through to the inside of the home. Is the master bedroom located in a more private region of the home, or is it in an area close to the public section? If you plan on having a garden, does the yard receive sufficient sunlight, or is most of it in the shade during the brightest part of the day? If possible, you should also visit the neighborhood during different parts of the day and evening, to get a general idea of the traffic and neighborhood ambiance.
Make An Offer—I’m Ready To Buy That!
Once you find your dream home, the next step in your home buying process will be exciting. It’s time to make an offer! Your real estate agent will put together a purchase agreement, which you’ll sign and submit to the sellers. The sellers will review the offer, then they’ll have the option to accept, reject, or counter-offer. Your real estate agent and the seller’s real estate agent will be in contact with each other throughout the offer phase, and your real estate agent will provide you with updates.
Mortgage Application—It’s Time For Financing So I Can Buy That!
You probably had to sign some paperwork during your pre-approval process, but the majority of the mortgage application and disclosures require signatures once you’ve entered into contract to buy a home. Your Mortgage Advisor will review the paperwork with you, and provide you with a list of any updated items you might need to provide at this time. Usually, around this time, your application and documentation will go through underwriting.
Home Inspection—How Can I Avoid Buyer’s Remorse?
While you’re working with your Mortgage Advisor on your mortgage application process, you’ll also be going through the home inspection process with your real estate agent. A home inspection is an important aspect of the home buying process because it will identify any potential issues with the home that might not be evident to the naked eye. Your home inspector will complete a full report for you, listing out any items that may need repair or remediation. Most purchase agreements are contingent upon completion of a home inspection, which gives the buyer the opportunity to negotiate for the seller to complete any needed repairs. Your real estate agent will help you with any negotiations needed at this time.
Appraisal—Is It Worth What I’m Paying?
After you’ve signed off on the home inspection, the next step in your home buying process is the appraisal. An appraiser provides an expert opinion of the value of the home. The appraisal report will compare the home against other recent home sales in the general vicinity. These homes are called comparables. The comparable homes will have similar features as your home, which helps ensure the sales price and value of the home are supported. You’ll receive a copy of the appraisal report when it’s complete.
Mortgage Closing—I Bought That! It’s Mine!
The final step in your home buying process is the closing appointment. You’ll receive a document called a Closing Disclosure. Your Mortgage Advisor will review the Closing Disclosure with you to make sure all the final numbers are accurate. You’ll work with your real estate agent and the closing company to schedule the signing appointment. On the signing day, you’ll arrive with your photo ID, and you’ll sign your final paperwork. The closing agent will notarize your closing documents and send them back to the lender for a final review. The lender will review and sign off on the final documents, then release the closing agent to record. The funds disburse from the lender, the documents record with the county, and you’re officially a homeowner!
Our Mortgage Advisors are here to help guide you through the home buying process, from Pre-approval all the way to closing. If you’re ready to get started, or have any additional questions, fill out the form below or contact us today!