Step 1: Start Your Research in Advance
Start off on Zillow or Redfin to get a general understanding of how much homes go for in the area. Save the houses that pique your interest and then see how long they stay on the market. If it’s a hot area, generally they last no longer than 1-2 weeks which means once you’re ready to really start shopping, you’ll have a general sense of how quickly you should put down an offer before it gets sniped by someone else. This will give you a general idea of how much homes go for and any relevant trends in the area.
Step 2: Find Out How Much House You Can Afford
Most lenders recommend people look for homes that cost no more than 3-5x their annual household income. Everyone’s financial situation is different so access your own accordingly.
Step 3: Get a Pre-Approval from a Mortgage Lender
Before you start dreaming of buying that property, we need to know how much you can afford. Shop around for the best rates from various lenders and get pre-qualified. They will ask for various paperwork such as W-2 statements, pay stubs, bank statements etc. Once your lender receives this information, they will be able to tell you how much house you can buy.
Step 4: Get a Real Estate Agent
It never hurts to have a Real Estate agent – for a buyer, it doesn’t cost you a dime! They are paid off the commission from the seller of the house. Buyers reap the benefit of an agent 100% for free! A Real Estate agent also has access to the database with the latest listings; even certain listings that the public never sees. They work for you and only help expand your search for your dream home.
Real Estate agents have insightful knowledge on specific neighborhoods, the home buying process, can negotiate and save you ten’s of thousands of dollars and are familiar with the latest urban developments coming to the area.
Step 5: Shop for Your Home and Make an Offer
Start touring homes in your price range. It might be helpful to take notes on all the homes you visit. You will see a lot of houses! It can be hard to remember everything about them, so you might want to take pictures or video to help you remember each home.
Make sure to check out the little details of each house. For example:
- Test the plumbing by running the shower to see how strong the water pressure is and how long it takes to get hot water
- Try the electrical system by turning switches on and off
- Open and close the windows and doors to see if they work properly
It’s also important to evaluate the neighborhood and make a note of things such as:
- Are the other homes on the block well maintained?
- How much traffic does the street get?
- Is there enough street parking for your family and visitors?
- Is it conveniently located near places of interest to you: schools, shopping centers, restaurants, parks, and public transportation?
Take as much time as you need to find the right home. Then work with your real estate agent to negotiate a fair offer based on the value of comparable homes in the same neighborhood. Once you and the seller have reached agreement on a price, the house will go into escrow, which is the period of time it takes to complete all of the remaining steps in the home buying process.
Step 6: Get a Home Inspection
Typically, purchase offers are contingent on a home inspection of the property to check for signs of structural damage or things that may need fixing. Your real estate agent usually will help you arrange to have this inspection conducted within a few days of your offer being accepted by the seller. This contingency protects you by giving you a chance to renegotiate your offer or withdraw it without penalty if the inspection reveals significant material damage.
Both you and the seller will receive a report on the home inspector’s findings. You can then decide if you want to ask the seller to fix anything on the property before closing the sale. Before the sale closes, you will have a walk-through of the house, which gives you the chance to confirm that any agreed-upon repairs have been made.
Step 7: Work with a Mortgage Banker to Select Your Loan
Lenders have a wide range of competitively priced loan programs and a reputation for exceptional customer service. You will have many questions when you are purchasing a home, and having one of our experienced, responsive mortgage bankers assist you can make the process much easier.
Every home buyer has their own priorities when choosing a mortgage. Some are interested in keeping their monthly payments as low as possible. Others are interested in making sure that their monthly payments never increase. And still others pick a loan based on the knowledge they will be moving again in just a few years.
Step 8: Have the Home Appraised
Lenders will arrange for an appraiser to provide an independent estimate of the value of the house you are buying. The appraiser is a member of a third party company and is not directly associated with the lender. The appraisal will let all the parties involved know that you are paying a fair price for the home.
Step 9: Coordinate the Paperwork
As you can imagine, there is a lot of paperwork involved in buying a house. Your lender will arrange for a title company to handle all of the paperwork and make sure that the seller is the rightful owner of the house you are buying.
Step 10: Close the Sale
At closing, you will sign all of the paperwork required to complete the purchase, including your loan documents. It typically takes a couple of days for your loan to be funded after the paperwork is returned to the lender. Once the check is delivered to the seller, you are ready to move into your new home!