Undoubtedly, every house-hunting situation is unique; however, these ten steps to homebuying will set you on the path to your perfect home. Of course, there is a good reason that embarking upon homeownership can be intimidating. For one thing, the research alone can quickly become overwhelming, and trying to understand the financial process is complicated.
Although this may be true, the pride and security that a new home brings are insurmountable. Whether you are a first-time buyer looking for a single-family home or an investor on the hunt for the perfect multi-million dollar complex, the steps are the same. With this in mind, here are ten simple steps to homebuying to help youth through the process.
1st Step to Homebuying
How much can you get qualified for?
Buying a home is a major commitment. Given the risks involved, we highly recommend finding and securing a qualified and trustworthy mortgage lender. In a nutshell, they will be an invaluable ally, and you can trust that your information is securely and safely pulled. The accuracy of the paperwork and personal information you supply is imperative. Throughout the mortgage application process, you want to ensure that you get preapproved and that your mortgage pre-approval letter is legit.
As a broad outline, many initial steps to understanding how much home you can afford can be performed online. In order to determine your affordability, use a mortgage calculator. Although these are never precise, you can figure out current mortgage rates and a general estimation of what to expect by using an online affordability calculator.
Be cautious of any online website that tries to collect personal information or asks to run a credit report for your credit score and credit history, especially if they charge you for prequalification. Securing funds for a home is an exact process. So when “professional” companies” offer mortgage preapprovals quickly, for a fee, it’s typically a scam.
2nd Step. Research research, research neighborhoods, and homes.
Commonly, the proverbial cart gets put before the horse throughout the home-buying process, especially with first-time home buyers. Consequently, much time is wasted looking for homes in neighborhoods that are out of the desired price range. By performing broad home searches of a town and a community on websites like Zillow, you can save yourself and your realtor a substantial amount of time.
As a safe rule of thumb, lenders recommend looking for homes that cost no more than five times your annual household income when planning to use a traditional financing strategy and come in with a 20% down payment coupled with a moderate debt-to-income ratio.
Neighborhood quality was the most important factor for 49% of buyers when determining a home’s location. –The Close
3rd Step. Interview and decide on your dream team
Three major professionals will guide you through the steps to homebuying: a lender, a realtor, and a title company. Once you narrow down the list of professionals that align with your needs, convey precisely who you want to use and ensure they all work together well. Everything will move more seamlessly when everyone is on the same page from the get-go.
Let’s talk about lenders. Above all, it is highly recommended to find and secure a qualified and trustworthy mortgage lender. In a nutshell, they will be an invaluable ally, and you can trust that your information is securely and safely pulled. Additionally, an in-person meeting with a lender helps ease any concerns and worries you may have.
From here, you can discuss loan programs, down payment assistance options, and eligibility, like VA loans. An experienced lender will give you a complete checklist of precisely what they need from you to get you prequalified and through underwriting scrutiny. In most cases, you must supply tax returns, bank statements, proof of monthly income, and a consistent work history.
Speaking of real estate agents, you’ll want to compare real estate professionals online to narrow down your needs. We recommend getting a referral from friends and family. Whether you are a first-time buyer or a seasoned real estate investor, you want to ensure your goals and strategy align with your realtor. After all, they will represent you.
By asking questions and discussing buying and selling strategies, you can rest assured that they are the right real estate agent for you. In the same fashion that finding the perfect type of home in the ideal neighborhood is important, so is aligning this major endeavor with the best professional team possible.
So what does a title company do, and why should you shop around? In a nutshell, they ensure that the property you buy can be sold legally. Title searches check for things like liens and tax issues. That might hinder the sale. Many homebuyers simply trust their agent and lender to work with the best company they know; there is nothing wrong with that.
After all, you hired the most qualified lender and agent you could find, right? At the end of the day, you want to ensure that the title company performs a title search to ensure the person selling the home is free and clear to do so. In essence, this step in homebuying ensures that all records regarding your new home are legit.
4th Step. Choosing a mortgage that works for you.
Remember when we were talking about lenders offering different loan programs? This fourth step in the homebuying process is to decide which type of loan works for you. As a rule, your lender will offer you many varieties, such as conventional loans, FHA loans, jumbo loans, VA loans, and many others. Just as every neighborhood and property is unique, so is every financial situation.
Take your time and find a lender who will educate you and explain why one loan program might suit you best. Financing a property comes with additional expenses exceeding your monthly mortgage payment. Borrowers need to prepare for mortgage insurance, property taxes, homeowners association fees, and closing costs, as well as the primary expense of the home purchase.
5th Step. to Homebuying Choosing your new home.
First and foremost, if you find yourself at this stage in the process, congratulations! Above all, take a minute and enjoy this stage of the process. Unquestionably, this is the moment where it all starts to feel real. Occasionally, buyers get very excited and rush through the initial tour because it is so exciting to find a property you like. So slow down and take your time. If possible, take pictures and videos while on the property. These photos and videos are very helpful when you are deciding.
Pro-Tip: Bring a tape measure to all walk-throughs and video the measurements; this way, you will know whether or not your furniture will fit in the rooms of your new space.
6th Step. It’s time to make an offer.
One of the most frequently asked questions regarding making an offer is, what Is an earnest money deposit? An earnest money deposit is paid upfront and will eventually go toward your down payment if you decide to follow through and buy the property. Essentially, it is a deposit, typically 1%-2% of the home price, given to the seller to secure the property. It is a good-faith gesture that you are interested and an authentic prospective home buyer. In most cases, you will lose the earnest money deposit if you agree to purchase the home and renege on the deal later.
Next, your agent will write the offer letter for you and then contact the seller’s agent to submit your offer. Of course, this may be the most nerve-racking step to homebuying. Keep in mind there could be multiple offers, and it may take a little more time than you expect.
From here, you can expect one of three things to happen.
- Offer acceptance. Yahoo, and you’re off to the races!
- Offer rejection. Don’t panic; this just means the ball is back in your court. You can either move on to another property or resubmit another offer entirely to suit the seller’s expectations better.
- If you receive a counteroffer, don’t panic. This situation is absolutely common. The seller may change the purchase price or the terms of the sale. In this situation, you are in control. If the terms still suit your needs, you can simply accept; if not, you are eligible to move on.
Your agent will be by your side through each and every step of the process, so just ride the wave. In fact, you have more control over this process than you may realize. Ultimately, if you and the seller can not manage negotiations that suit both parties, don’t be afraid to walk away. In truth, there is often a good reason that another opportunity may be better for you than one that is so hard to negotiate.
6th Step. Getting the property appraisal
Altogether, the average time for a home appraisal is seven to ten days. In the end, step seven and step eight may be the most important of all of the steps to homebuying. If something is wrong with the property or the seller has egregiously listed the home for more than it is worth, you’ll appreciate these inspections. You can expect the appraiser to visit the property for a few hours.
From here, they will measure square footage, features, and elemental features and compare the property to other homes in the surrounding areas to evaluate the comparison, you will be in a waiting game. In some cases, appraisers quickly write the report and submit their findings, while others may have a backlog of reports to write, and it can take some time to get to yours.
7th Step. Home Inspection
Lenders typically require a home inspection to ensure that a property meets the standards of safety, structure, and sound construction. Of course, just like any rule, there are exceptions depending on the type of loan you use. When a home inspector evaluates a property, you can expect them to check electrical, roofing, structural, and plumbing, to name a few.
The overall evaluation will alert you to any fed flags that have the potential to devaluate the property or risk the safety of the home’s occupants. Home inspectors know how to spot a problem before it becomes one. When it comes to the steps of homebuying, this is one of the most critical.
One survey conducted by home services platform Porch found that 86% of homebuyers who’d done an inspection discovered something that needed to be fixed. What’s more, 46% said it enabled them to negotiate a lower sale price.
8th Step Final walkthrough
Although the final walkthrough may seem redundant, since you have already performed the home inspection, this 9th step to homebuying is essential. If a homeowner fails to complete a repair to the agreed-upon terms or fails to complete them at all, this is your opportunity to check your property. Your real estate agent will be by your side, and a great agent will come equipped with a list, and frequently, they will have tools to check the property’s performance, like outlet testers and light bulbs.
Pro Tip- If you are lucky enough to have bad weather, try and schedule the walkthrough just afterward. Take advantage of this prime opportunity to see if there are any sinkholes, water leaks, or trouble areas that you might not be able to see.
9th Step. Coordinate the paperwork and close on the property.
Closing day is such a rewarding one. In most cases, this is the day you get the keys to your dream home, and the hard work finally pays off. You and your realtor will meet at the title company. The steps to closing will look something like this. You will transfer funds from escrow, provide mortgage and title fees, and change the deed into your name. The closer will assist you in signing all of the closing disclosures necessary to transfer the property to you. The closing date is the official date that you own your new home.
10th Step to Homebuying
It’s time to move in and make your dream home a reality. Undoubtedly, this is an exciting time, and the excitement is well-deserved. Here are a few tricks and tips to help make the day easier. It may sound simple, but transfer the utilities into your name. After all, you will need water and electricity to enjoy your new space.
If possible, schedule a professional to come in just before moving day to prep the house for the move-in. It may sound crazy to clean a perfectly empty house, but not everyone upkeeps a property to your standard. Simply put, starting your new life with a clean slate is such a good feeling. –Forbes
Arrange for offsite babysitting and pet sitting moving day. All the activity will stress out your animals, and the kids will most likely be bored. Save yourself from the stress by making alternative arrangements for them.
Additionally, make a checklist for the day. Planned moves are less stressful, so take the time to decide which boxes need to be opened immediately and which ones can wait. We advise packing an “essential” box for each room of the house. Those boxes will contain vital items for comfort, such as toothpaste, toiletries, and bathroom towels. Not only will this save you the hassle of trying to find the coffee maker at the crack of dawn, but it also provides the comfy feel that only your home has. This simple step may save you from opening 20 boxes just to find your phone charger before bed.
Now that you know the 10 Steps to Homebuying, who can help?
Your home plays a major role in financial security. So, regarding your mortgage loan, you want to be sure you’re making responsible decisions. Undoubtedly, the loan process invokes insecurity in many people. In particular, navigating through a sea of paperwork and financial jargon can be unsettling without honest guidance. In fact, a lack of clarity can lead you down the wrong path and compromise your financial future.
You deserve to work with a lender who brings clarity and has your best interest at heart. Whether you are looking to purchase a home, help with refinancing, lower interest rates, or specifically ensure that you have made the best decision for the life of your loan, Mortgage Insider can help you after helping thousands of families reach their goals to create stronger financial futures.
The steps are simple:
1. Schedule a Call: An experienced loan officer can discuss your needs and guide you through the possibilities.
2. Get Approved: We’ll help you through the application process and facilitate the steps for approval.
3. Exhale: Put your feet up and feel secure knowing you made the best decisions about your home loan.
With proper guidance, you can get your first home, accommodate your growing family, refinance, or start that renovation project—whatever goal is on the horizon. An alliance with Mortgage Insiders will give you the confidence to know that your mortgage loan is setting you up for financial success. Mortgage Insiders offers today’s latest financial news and mortgage trends. Check out their channel for current events.
