So, you want to buy a house—now what? The first time buying a home
is an emotional, exciting, and also exhausting 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.
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 what your monthly mortgage payment would be 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.
Get pre-approved. To get pre-approved for a
mortgage you’ll need to get some paperwork ready: pay stubs, W-2s, bank
account statements, tax returns for the past two years, and 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.
Find an agent. A good 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 perfectly 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 an amazing 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 where 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 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 clean, you should be ready to
close. At your closing, you’ll spend a little over an hour signing lots
of paperwork and then will be handed the keys.
