Where to start when buying a house

When embarking on the journey of purchasing a home, it's essential to consider several key factors that will shape your decision. Here are some pivotal questions to ponder:

  1. Budgeting: What is the comfortable price range for your new home?

  2. Financing: Will you be taking out a mortgage loan to finance your purchase?

  3. Down Payment: How much have you set aside for the initial down payment?

  4. Location: Is your desired neighborhood within your financial reach?

  5. Market Trends: Are property values in your chosen area on the rise or experiencing a decline?

  6. Commute: How long will your daily commute be from your prospective new home?

  7. Education: Does the school district align with the educational needs of your family?

  8. Convenience: Is the property conveniently located near amenities and recreational activities?

These considerations will help you make an informed decision when it comes to buying your new home.

01

Pre-Approval

02

Get a Real Estate Agent

03

The House Hunt

04

The Offer

05

Home Inspection

06

Purchase & Sales

07

Mortgage Application

08

Commitment Date

09

Closing Disclosure

10

Final Walkthrough

1. Pre-Approval

Pre-approval is your gateway to confident home buying. It involves a thorough evaluation by a lender, considering your financial situation and determining the precise mortgage amount you qualify for. Here's why it's so crucial:

Know Your Buying Power: Pre-approval grants you a clear understanding of your budget, helping you focus on homes within your price range.

  • Seller Appeal: Sellers favor pre-approved buyers, viewing them as serious, qualified, and ready to make a purchase. This can give you a competitive edge, especially in a bustling real estate market.

  • Speed and Assurance: With pre-approval, you can act swiftly when you find the perfect property, knowing your financing is in order. This not only saves time but also instills confidence in your homebuying journey.

  • Precision: Pre-approval prevents you from wasting time on properties outside your financial capacity, streamlining your search.

The Pre-Approval Process

Getting pre-approved is a straightforward process. Here's how it works:

  1. Submit Your Application: Begin by filling out our secure online application, providing essential information about your home purchase aspirations.

  2. Credit Evaluation: We'll conduct a credit check to assess your credit history, a key factor in the pre-approval process.

  3. Documentation: Gather necessary financial documents, including income statements, tax returns, and bank statements, to support your application.

  4. Review and Decision: Our experienced team will thoroughly review your application and financial records, providing a swift decision on your pre-approval status.

  5. Receive Your Pre-Approval Letter: Once approved, you'll receive a pre-approval letter. This document not only defines your borrowing capacity but also proves your seriousness as a buyer, a significant advantage in competitive markets.

Note: You're not obligated to use the same lender for your loan as your pre-approval. In fact, it's advisable to obtain estimates from multiple lenders, comparing interest rates and fees before committing to your mortgage.

2. Find a Real Estate Agent

Many homebuyers discover the value of having a seasoned real estate agent by their side to navigate the complex process. What's more, the majority of the time, it's the sellers who cover the buyer's agent commission, making this an affordable choice for buyers.

How a Buyer's Agent Can Assist You:

  1. Market Insights: A buyer's agent provides invaluable insights into market trends, new developments, buyer demand, and the overall state of the real estate market.

  2. Offer Price Guidance: They determine the true value of a home and recommend a competitive initial offer amount, ensuring you make informed decisions.

  3. Negotiation Expertise: Your agent knows precisely when to negotiate for a better price and how to handle contingencies and repair negotiations.

  4. Local Expertise: Armed with insider knowledge about neighborhoods and schools, they help you find the right fit for your lifestyle.

  5. Professional Recommendations: A trusted buyer's agent can connect you with reputable lenders, attorneys, contractors, and other essential vendors when needed.

  6. Experience Matters: They simplify the process by handling unexpected issues, staying on top of critical due dates, and overseeing paperwork, reducing your stress.

3. The House Hunt

Embarking on the journey of finding your dream home often starts with a few clicks and keystrokes. Customize your search by filtering for price and must-have features. Additionally, your trusted agent can curate listings and arrange property showings tailored to your preferences.

Embrace Flexibility in Your Search

Maintaining flexibility is key as your home search unfolds. Be prepared to adjust your criteria as you explore the market. For instance, you might find it worthwhile to compromise on an extra bedroom to secure your ideal neighborhood. Experiment with different search parameters to discover how your options evolve when you tweak your wish list.

What to Assess During Home Tours

When you transition from virtual exploration to in-person tours, it's crucial to assess the overall condition of the homes you visit. While a comprehensive inspection will provide an official report, your initial tours can give you valuable insights. Keep an eye out for the following:

  1. Structural Integrity: Look for any signs of structural defects or cracking that may indicate potential issues.

  2. Water Quality: Test water pressure by turning on faucets and showerheads to ensure satisfactory flow.

  3. Electrical Functionality: Experiment with light switches to identify any electrical problems or irregularities.

  4. Door and Window Performance: Assess the functionality of doors and windows, and inquire about heat retention for energy efficiency.

  5. Exterior and Roof: Examine the quality of the roof and exterior materials for signs of wear or damage.

  6. Noise Levels: Pay attention to noise levels from neighbors or nearby traffic, which can impact your living experience.

By being attentive during your home tours, you'll gain preliminary insights into the condition of a property, helping you make informed decisions as you progress toward homeownership.

4. The Offer

Once you've identified your ideal home, it's time to present an offer guided by a comprehensive Comparative Market Analysis (CMA), thoughtfully prepared by your agent. The CMA calculates a home's market value based on recent comparable sales in the vicinity.

When purchasing a home with a mortgage, the closing process typically spans 30-45 days from the moment the contract is signed. Relying on the CMA as your foundation, your agent will assist you in determining a fair offer price and whether to leave room for negotiation—adapting to the dynamics of your local real estate market.

Beyond the CMA, consider these vital aspects when structuring your offer:

  1. Disclosures: These documents reveal known issues related to structural concerns, unpermitted work, natural hazards, and flood risks. In most states, sellers are obliged to provide disclosure documents, and your agent should ensure you receive them.

  2. Closing Date: For mortgage-based purchases, expect a 30-45 day closing timeline once the contract is executed. While you can request a later closing date to align with your moving plans, sellers may have their preferences.

  3. Contingencies: Contingencies outline conditions that must be met for the sale to proceed. Essential contingencies, like the appraisal contingency mandated by your lender, ensure loan accuracy. An inspection contingency, though optional, is strongly advised. According to Zillow's Consumer Housing Trends Report, 88% of successful buyers retained their inspection contingency.

  4. Earnest Money: An earnest money deposit signifies your commitment to purchasing the home. If the deal closes, this deposit becomes part of your down payment. Should you withdraw from the purchase (outside of a contingency), you forfeit the deposit.

Remember, not every offer culminates in success. While setbacks can be disheartening, don't be discouraged if your first offer doesn't secure your desired home. The journey to homeownership often involves multiple steps, and persistence pays off in finding the perfect property.

5. Home Inspection

Ensuring your prospective home is free of significant hidden concerns is a pivotal step in the home buying journey.

What is a Home Inspection?

A home inspection is a critical evaluation conducted by a licensed professional to assess the condition and integrity of the property. This process offers peace of mind by revealing any major underlying issues that may not be apparent during a standard walk-through.

How to Navigate the Home Inspection:

  1. Inspector Selection: Your trusted real estate agent can recommend a reputable, licensed home inspector, or you can explore Zillow's professional directory, considering home buyer reviews to make an informed choice.

  2. Timing: Typically, the inspection is scheduled within a week of signing the contract. It's strongly advised that you attend the inspection to gain deeper insights into the property's inner workings. Your agent often accompanies you.

  3. Review and Response: Upon receiving the official inspection report, you'll have the opportunity to discuss the findings with your agent. Together, you'll decide on the most suitable course of action in response to the inspection results.

Addressing Inspection Findings:

In cases where significant, non-cosmetic issues are uncovered, you have options:

  • Negotiation: You can reopen negotiations with the seller, proposing that they address and rectify the identified issues before closing, or provide you with a credit to undertake the necessary repairs post-closing.

The home inspection step is your safeguard against unexpected surprises and a crucial element in the home buying process, ensuring you invest in a property that aligns with your expectations and budget.

6. Purchase & Sales Signing

The Purchase & Sales Agreement (P&S) is a legally binding contract that solidifies the terms and conditions of your home purchase. It outlines the crucial specifics of the transaction, such as the purchase price, financing details, timelines, and contingencies.

Key Highlights of the Purchase & Sales Signing Process:

  1. Contract Review: Your real estate agent, along with your legal representation if desired, will guide you through the P&S agreement. This comprehensive document covers all essential aspects of the transaction, ensuring clarity and transparency.

  2. Negotiation: The P&S agreement often involves negotiations between you and the seller. This can include discussions on price adjustments, contingencies, and any necessary repairs or updates to the property.

  3. Timelines: The agreement establishes key timelines, including deadlines for inspections, financing, and the closing date. Adhering to these dates is crucial to keep the process on track.

  4. Contingencies: Contingencies within the P&S agreement provide a safety net for both parties. Common contingencies include financing, inspection, and appraisal contingencies, allowing you to address any unforeseen issues that may arise.

  5. Signatures: Once all parties are in agreement and all terms are finalized, it's time to sign the Purchase & Sales Agreement. Your agent will guide you through this process, ensuring that all signatures are obtained in accordance with legal requirements.

  6. Earnest Money: You may be required to provide earnest money as a sign of your commitment to the transaction. This deposit is typically held in escrow and applied toward your down payment or closing costs.

  7. Legal Consultation: If you have any legal questions or concerns about the contract, it's advisable to consult with an attorney specializing in real estate law.

The Purchase & Sales Signing is a significant step towards securing your new home. It's essential to understand the terms of the agreement fully, ensuring that all parties involved are on the same page. Your real estate agent will serve as your trusted guide throughout this process, making sure your interests are protected.

With the P&S agreement in place, you'll have a clear roadmap to follow as you progress towards the final closing, where you'll officially become a homeowner.

7. Mortgage Application

A Mortgage Application is your formal request for a home loan, the financial cornerstone of your home purchase. It's the bridge between your aspirations and the reality of owning your new property.

Key Highlights of the Mortgage Application Process:

  1. Preparation: Begin by gathering essential financial documents, including income statements, tax returns, bank statements, and employment history. These documents provide the foundation for your application.

  2. Lender Selection: Carefully choose a reputable mortgage lender who aligns with your needs. Your real estate agent can provide recommendations, or you can research lenders to find the best fit.

  3. Application Submission: Complete the mortgage application provided by your chosen lender. It typically includes details about the property you intend to purchase, your financial information, and your consent for a credit check.

  4. Credit Check: Lenders will evaluate your creditworthiness by conducting a credit check. A strong credit history enhances your eligibility for favorable loan terms.

  5. Loan Pre-Approval: Upon review of your application and credit history, your lender will issue a pre-approval letter. This letter outlines the loan amount you qualify for, empowering you as a confident buyer.

  6. Documentation Review: Expect your lender to meticulously review your financial documents, ensuring all information is accurate and verifiable.

  7. Property Appraisal: The lender will typically order a property appraisal to determine its fair market value. This step is crucial to assess the property's worth relative to the loan amount.

  8. Underwriting: The lender's underwriting team assesses your application, property details, and credit history to make a final loan decision.

  9. Conditional Approval: If all criteria are met, you'll receive a conditional loan approval, which may include stipulations like further documentation or additional conditions.

  10. Clear to Close: Once all conditions are satisfied, you'll receive a "clear to close" status, indicating that your loan is ready for finalization.

  11. Closing: The closing date is scheduled, and you'll sign the necessary documents to complete the transaction. At this point, you officially become a homeowner.

  12. Repayment: After closing, you'll begin repaying your mortgage according to the agreed-upon terms.

Navigating the Mortgage Application process may seem complex, but with the right support and guidance from your lender and real estate agent, you'll confidently secure the financing needed to purchase your new home.

8. Commitment Date

The Closing Disclosure is a detailed document that outlines the final terms and costs associated with your home loan.

Key Highlights of the Closing Disclosure Step:

  1. Document Review: Your lender is legally required to provide you with the Closing Disclosure at least three business days before your scheduled closing. Take time to thoroughly review this document to ensure accuracy and transparency.

  2. Loan Terms and Costs: The Closing Disclosure provides a breakdown of your loan terms, interest rate, monthly payments, and the total amount you'll pay over the life of the loan.

  3. Closing Costs: This document itemizes all closing costs, including fees for services such as appraisals, inspections, title insurance, and more. Review these costs to ensure they align with your expectations.

  4. Cash to Close: The Closing Disclosure calculates the total amount of cash you'll need to bring to the closing table. This includes your down payment, closing costs, and any prorated property taxes or homeowner association fees.

  5. Comparisons: You can compare the Closing Disclosure with your Loan Estimate, which you received earlier in the process. Ensure that the terms and costs are consistent with what you anticipated.

  6. Contact Your Lender: If you have questions or concerns about any aspects of the Closing Disclosure, contact your lender promptly for clarification.

The Closing Disclosure is a critical document that ensures transparency and fairness in the home-buying process. By carefully reviewing and understanding its contents, you'll be well-prepared for a successful and seamless closing day.

9. Closing Disclosure

The Commitment Date is a crucial milestone in the home-buying process, representing the point at which your lender provides a formal commitment to finance your home purchase. It's the final green light that propels you toward closing the deal and becoming a proud homeowner.

Key Highlights of the Commitment Date Step:

  1. Conditions Review: Your lender conducts a comprehensive review of your financial documentation, the property's appraisal, and any outstanding conditions. This ensures that all criteria are met for the mortgage to proceed.

  2. Property Valuation: The lender re-evaluates the property's value, ensuring it aligns with the loan amount and meets their lending standards.

  3. Document Verification: All required documentation is re-verified to confirm its authenticity, such as employment records, bank statements, and income statements.

  4. Stipulations Resolution: Any remaining stipulations or conditions outlined during the conditional approval phase are addressed and resolved.

  5. Closing Preparation: With the Commitment Date secured, you'll proceed with final preparations for the closing, including coordinating with your real estate agent, attorney, and other relevant parties.

The Commitment Date is a significant step that instills confidence in your journey to homeownership. It signifies that your lender is fully committed to financing your home purchase, paving the way for a smooth and exciting transition into your new home.

10. Final Walkthrough & Closing

The Final Walkthrough & Closing is the pinnacle of the home buying process, where you ensure the property is in the expected condition and complete the legal and financial aspects to secure your new home.

Key Highlights of the Final Walkthrough & Closing:

  1. Final Property Inspection: The final walkthrough is your opportunity to verify that the property is in the agreed-upon condition. Check for any issues or discrepancies compared to your previous inspections.

  2. Property Utilities: Ensure that all utilities, including water, electricity, and gas, are functioning correctly and transferred to your name as of the closing date.

  3. Outstanding Repairs: Confirm that any repairs or maintenance agreed upon during negotiations have been completed satisfactorily.

  4. Property Contents: Ensure that all items included in the sale, such as appliances or fixtures, are present and in working order.

  5. Documentation Review: Carefully review the Closing Disclosure and other closing documents provided by your lender and attorney. Verify that the terms, costs, and other details align with your expectations.

  6. Closing Funds: Be prepared to provide the necessary funds for closing, including your down payment, closing costs, and any prorated property taxes or homeowner association fees.

  7. Legal Signatures: Attend the closing meeting, where you'll sign the required legal documents, including the mortgage note and the deed. Your attorney, real estate agent, and lender will guide you through this process.

  8. Ownership Transfer: With the completion of the closing, ownership of the property is officially transferred to you, and you'll receive the keys to your new home.

  9. Post-Closing: Continue to monitor your mortgage statements and keep track of your payments to ensure everything aligns with the terms outlined in the closing documents.

Congratulations on reaching this exciting milestone, and may your new home be filled with joy, happiness, and cherished memories for years to come.