Walter GormanSenior Loan Officer NMLS#: 138370
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- Figure Out Why You Want to Buy a Home
As you probably already know, or have been told before, buying a home will be one of the most important financial decisions you’ll ever make. So, before you get into the home-buying process, you should ask yourself why you want to move forward with it and if it’s what’s best for you and your financial goals. Ultimately, it’s important to determine if it makes sense financially for you.
- Check Your Credit Score
This is one of the important first steps in the home-buying process. You will want to check your credit score, so that your lender can use it to help determine your loan pricing and how much you could get approved for. There are many different credit reporting agencies that can run your score for you, but you can also have your lender do so. If you have a low credit score, your lender can also help guide you and give advice for trying to get it higher.
- Figure Out Your Budget
Your first step into figuring out your budget is understanding the maximum loan amount you can qualify for. However, you also need to factor in other expenses that will arise throughout the mortgage process, and even after you’ve purchased a home. Keep in mind, you will still need money for a down payment, closing costs, and any additional future costs like homeowner’s association fees, taxes, and the cost of your monthly mortgage. It’s a great idea to sit down and factor in all your other expenses you already have, and how new ones from purchasing a home will fit into that.
- Save for a Down Payment
If you haven’t already done so, you’ll need to save up some money for your down payment. If you’re able to put down 20%, you’ll avoid paying private mortgage insurance (PMI), which is recommended if you can do so. However, make sure to speak with your lender, as there are many different down payment options that can fit your financial needs. An FHA loan allows you put just 3.5% down, while there are also specific down payment options for Veterans like VA and USDA loans.
- Shop Around for a Mortgage
You will definitely want to speak to different lenders and shop around for a mortgage when you’re starting the home-buying process. Different lenders offer different interest rates, options, and overall costs, and some even have other incentives that could be available to you. Either way, you’ll want to see who can offer what to help you decide who you would like to work with.
- Pick a Real Estate Agent to Work With
Hiring the right real estate agent for you is also an important factor. You’ll want to work with someone who can not only help you find your dream home, but will be able to successfully negotiate for you. It’s also a good thing to work with an agent who is knowledgeable in the area you’re looking in, so they have the proper understanding of that market and that specific market’s pricing.
- View Multiple Homes
By viewing multiple homes, you’ll also start to pick up on what houses in that area are worth and what they’re selling for. During your search, your real estate agent will send you listings through the MLS, and you’ll be able to schedule showings with their help. Before you start looking, it’s a good idea to come up with a list of things you want and don’t want in your future home, and to share that with your agent. In the long run, that will only help the realtor weed out the listings for you based on what your must-haves are.
- Make an Offer
Once you’ve found the home of your dreams, it’s time to make an offer. Your real estate agent will help you with this and will make sure you have all the proper paperwork and documents for them to present to the sellers. This will include your offer price, preapproval letter, and your terms/contingencies. If it’s a multiple-bid situation, your agent can also help direct you in trying to beat out your competition. This can include waiving home inspections, waiving an appraisal, writing a personal letter to the seller’s, and more.
- Complete a Home Inspection
Once you have an accepted offer, your contract will specify the window you have to conduct a home inspection on the property. Your realtor will be able to recommend a professional home inspector to do so, and that person will educate you about the property and if it has any mechanical/structural issues.
- Negotiate any Home Repairs
After a home inspection has been conducted, you’ll want to take the professional inspector’s advice on any repairs that should be done to the home. Your attorney can help go over the inspector’s report with you and you can decide on a list of things you would like fixed, or you can ask the sellers for a credit. Your realtor and attorney can help negotiate this for you, but you’ll want to make sure you come to some sort of agreement before your lender moves forward with the deal.
- Secure your Financing
As your lender is completing the underwriting process for you, you might need to give them additional paperwork like bank statements, tax returns, gift letters, and more. It’s also important to keep your finances in check during this time and until you close on your home. You do not want to run up your credit cards, close credit accounts, start a new job, or take out any new loans, as it could hurt your credit, and might hinder your closing.
- Do a Final Walk-Through of the Home
Before closing on the property, you’ll want your realtor to set up a final-walk through of the home with you. This is usually conducted a few days before the closing. The main objective is to make sure that any repairs you agreed upon have been completed as stated, and you want to see that the property is in move-in ready condition.
- Close on Your New Home
Once your lender has given you a “clear to close” status on your loan, and you’re satisfied with the final walk-through, and all contingencies have been met, you will officially be able to close on your new home. Three business days before your closing, your lender will give you a closing disclosure, an outline of your loan details, and how much money you need to bring to the closing table. You’ll want to review everything and ask any questions to your lender that you may have.
The closing will be attended by the buyer (you), and typically your realtor, your attorney, and sometimes the seller’s agent as well. At this time, you will also wire your closing costs and down payment, depending on the escrow company’s procedures.
Once you have all of the paperwork signed, and you’ve received your new house keys, the home is officially yours, and ready to be moved into!