Steps to Buying a Home

Before the house hunting process begins, it is important to know how much you can afford. Expenses to consider include the down payment, monthly expenses, property taxes, and any home insurance costs. These will all have to be considered before the home buying process begins as they are typically included in your new monthly payment. Since a person’s credit score determines their interest rate, knowing your score ahead of time can help you decide if now is a good time to buy or not. An individual’s debt-to-income ratio must also fall within acceptable limits of the home’s cost. Once you have determined these things, and if you feel that your budget has enough room to afford a new home, then it’s time to look for the right loan.

Different banks and companies will offer different loan origination fees and by shopping around you can oftentimes save yourself a lot of money. Get multiple quotes so you can make sure you get the best rate and terms. Be sure to also check your loan officer’s website for testimonials and information. A good loan officer will offer you many online resources and tools. Before you lock in your rate, be sure to check the daily rate with the rate your loan officer gives you to ensure you are getting the lowest rate possible. Interest rates will determine how much a mortgage will cost each month and come in fixed or adjustable terms. Mortgage lengths can range from 15 years to 30 years. The longer the repayment term, the lower the payments will be. However, the interest accrued will also be higher on a longer loan. Don’t forget to ask for a pre-approval letter so you can include this with any offers you make.

Before you start your home search, it is important to find a buyer’s agent that will be looking out for your best interests so you don’t fall into a money pit or end up paying too much for your new home. A good buyer’s agent will help guide you through the home buying process and can also save you TONS of time and money on the road to your new home. Buyer’s agents are legally bound to help buyers, whereas listing agents—the real estate agent representing the home listing—have a fiduciary duty to the home seller. Your buyer’s agent will also set up home tours, give you insight on any homes you like that you may not be aware of, have knowledge of upcoming listings not yet on the market, help you negotiate the best terms, protect your part in the deal, and give you invaluable advice throughout the process.

Start your home search by using your agent’s website (like this one!) to search the MLS for homes. Agents have a direct line to the MLS, so their websites often update with the newest properties faster than the ‘big name’ sites out there. It also has a My Listing Manager tool that keeps you both in the loop. You can start your search and begin saving your favorite properties to your account and even set up alerts to get new homes and price changes emailed to you. Your agent can then see the properties you have liked and can send potential new properties directly into your listing manager that they think you may be interested in. It’s a WIN-WIN!

There is an art to making an offer on a home. Your buyer’s agent will help you choose the right terms for your offer and will be watching for signs of problems in the home. Listen closely and be sure to ask questions. Be sure to ask for an inspection contingency so if there are major problems, you can back out of the deal without losing your earnest money. A home warranty is also a valuable part of your contract and is a sign of good faith on the seller’s part. You want to make sure all of your bases are covered. That’s where having a buyer’s agent is most valuable: so your rights and interests are protected. With their experience on your side, they will be able to help you negotiate a lower price that sometimes includes concessions or closing costs. Their job is to protect YOU in the contract.

Once your offer has been accepted, you will need a home appraisal. Banks require this so they can make sure the home is worth as much money as they are lending you. You may also need some inspections depending on your loan type. FHA and VA loans have more requirements than conventional loans. This is also the time to have a full home inspection, even if it is not required. A home inspector will go through the home and specifically look for problems and provide you with a full report on everything they find. This will give you the opportunity to avoid major problems and back out of the sale or negotiate repairs without losing your earnest money.

Once the inspections are done, you will more than likely ask the seller to fix some of the issues you found. Keep in mind that they are only required to fix something if the loan terms require it. Be reasonable but firm in your requests. If your seller rejects your request, then it is up to you to decide how to proceed.

The final walk-through is an important last step, even if you are positive you are going to go through with the sale. Walk through and check the agreed upon repairs, make sure everything is in working order and new issues have not popped up. This is your last opportunity to back out. If everything looks good, then it’s time to go to closing!

Before the home is legally transferred to you, the closing process must occur. During this phase, you will sign all of the mortgage documents, pay closing costs, and sign various other legal documents. Your buyer’s agent will be at the closing with you to help you through it all. Once all of the papers are signed and monies are transferred, the keys to your new home are yours! The only thing left to do is move into your humble abode. This may occur immediately after the closing or at the date set in the closing documents.

Depending on how far you’re moving or how much stuff you have, you may require a moving company or a moving truck. Professional movers may seem pricey at first, but when you look at the time and money to get similar results, you may re-consider. Call and set your moving date and start packing! Many places like U-HAUL sell moving boxes that are made to make your move easier. Label everything with what is inside it and what room it goes in. Recruit friends and family if needed.