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So, you want to buy a house—now what? The first time buying a home is an emotional, exciting, and also stressful experience. You may also be wondering along the way—what am I missing? This is a common question
Here’s how the buying process works from start to finish
- First Step KNOW Your Credit! Pull You Credit Through Experian.com or Credit Karma. Pulling your own credit does not effect your score. You will be able to see if there are any errors and or issues you were unaware of and correct them. You will also get to see your debt in the eyes of the lender.
- Do some preliminary online searching. Check into what homes are selling for in the areas you’re interested in to give you an idea of what you’re looking for. This will help later on when communicating your wish list with your real estate agent.
- Take care of the budget. Use an online mortgage calculator to determine your monthly mortgage payment if you were to purchase one of these homes you’ve found online. Make some additional estimates for utilities and see if this fits into your budget. Write out or use online budget tool like Mint.com. Knowing your budget will help you determine the mortgage you will be comfortable with. Experts say no more than 28% of your gross income should go towards housing costs. A good frame of thought, even though I do not believe I had this ratio when purchasing our first 3 homes 😊.
- Get pre-approved. To get pre-approved for a mortgage, you’ll need to get some paperwork ready: pay stubs, W-2's, bank account statements, tax returns for the past two years, credit lines, and names and addresses of your landlords for the past two years. Start with your current bank, but make sure you check out competitor banks as well – you might get a better mortgage loan rate by shopping around. Also, consider the amount your lender approves you for as a maximum – this is by no means what you should spend. I prefer credit unions and ARMs; having worked at SDCCU for over 13 years as a mortgage loan officer I can help guide you through the process.
- Find an agent. ✓ An excellent real estate agent will help you navigate the process every step of the way. Your friends and family will be great sources—see if any of your trusted contacts have someone they recommend.
- Look at homes. Be patient at this stage. Your real estate agent may show you a variety of homes to get your reaction on features they think you’ll like. Give your agent detailed feedback so they can show you homes that are ideally suited to you. Sometimes, this process can take months or years—So be patient. Also, make sure you let friends and family know you’re looking for a new home--you may even find out about a fantastic home before it hits the market.
- Make an offer. Once you’ve found your dream home, you may want to move quickly. Your agent will guide you on a reasonable first offer to start negotiations based on market conditions. Also, make sure you consider closing costs which could account for 2-5% of the home price.
- Negotiate. Prepare to go back and forth with the seller a few times on price and selling conditions. Your real estate agent will be your advocate here and try to get you, their client, as much as possible for your money while being fair and respectful to the seller and their real estate agent.
- An accepted offer. Pop the champagne! If you reach an agreement, you’ll make a deposit to an escrow account to show good faith. Escrow is usually 30 days when the seller takes the house off the market with the contractual expectation that you’ll purchase the house - provided you don’t find any serious problems during the inspection.
- Do a home inspection. Even if the home appears to be flawless, there’s no substitute for having a professional inspector review the property for the quality, safety, and general condition of your potential home. You don’t want to be surprised with a home that needs a lot of unexpected repairs. If the inspection reveals undisclosed serious defects, you can negotiate further to have the seller make repairs or discount the selling price. You’ll also likely have the option to withdraw your offer and get your deposit money back.
- Closing. When your negotiations with the seller are successful, and the inspection came back, you have negotiated any necessary repairs or credits, you should be ready to close. At your closing, you’ll spend a little over an hour signing lots of paperwork; your lender will fund once the documents are reviewed, the title company will send the deed for recording at the county and once recorded, your agent will set up a time to give You your keys!.
