The home-buying process doesn't need to be scary. This step-by-step guide will walk you through the process and answer some questions about buying a home. Knowledge and experience are the keys to successful real estate transactions. Hopefully our website combined with the expertise, experience and training of local REALTORS® can be the essential keys to your success.
Step 1: Are you Ready?
- Do You Know What You Want?
- What are you looking for?
- What is your timeline?
As an interesting exercise, it can be worthwhile to look at the questions above and to then discuss them in detail when meeting with local REALTORS®.
- Do You Have The Money?
- Down-payment (good news: a lot of loans require less than 5% down)
- Closing Costs
Those great loans with little or nothing down are not available to everyone: You need good credit. For at least one year prior to purchasing a home, you should assure that every credit card bill, rent check, car payment and other debt is paid in full and on time.
Step 2: Get a REALTOR®
Buying and selling real estate is a complex matter. At first it might seem that by checking local picture books or online sites you could quickly find the right home at the right price. In this maze of forms, financing, inspections, marketing, pricing and negotiating, it makes sense to work with professionals who know the community and much more. Those professionals are the local REALTORS® who serve your area.
Step 3: Get Loan Preapproval
Less than 1 percent of home owner purchase the home with cash which means you will probably end up getting a loan to purchase your new home. Most of the time it is not a question of “…will you be able to get a loan?” but “… what are the terms of the loan?”
REALTORS® routinely suggest that consumers start the mortgage process well before bidding on a home. By meeting with lenders -- either online or face to face -- and looking at loan options, you will find which programs best meet your needs and how much you can afford. By meeting with loan officers in advance and identifying mortgage programs, it won't be necessary to quickly find a lender, check credit, and rush into a financing decision that may not be the best option.
What is it?
"Preapproval" means you have met with a loan officer, your credit files have been reviewed and the loan officer believes you can readily qualify for a given loan amount with one or more specific mortgage programs.
- Receive a pre-approval letter
- Meet with as many lenders as you would like to ensure you are getting the best terms (keep in mind that they will each do a credit check and that will show on your credit report)
Step 4: Look at Homes – Find a Property
Step 5: Choose a Home
There's no doubt that choosing a home is a big decision and you want to do it right.
As a buyer, here is the process.
Is it THE house?
A house is shelter, but a home is far more. It's where you live, relax, entertain friends, raise families, and work. A home is where you spend much of your life, and so choosing a house is an enormous decision.
How do you know if a house is THE one? Probably the best approach is to look at as many homes as possible, which is another reason why contacting a local REALTOR® to find specific information and options about each house is so important.
Can you really afford it?
Remember Step 2 - the preapproval process? Getting preapproved means you have a very good idea of how much you can afford to borrow.
Step 6: Get Funding
Often the cost of real estate financing is routinely greater than the original purchase price of a home (after including interest and closing costs). Because financing is so important, buyers should have as much information as possible regarding mortgage options and costs. Local REALTORS® can provide mortgage information, discuss financing options and recommend loan sources.
What kind of loan?
Key factors:
Other items to consider:
Step 7: Make an Offer
Your REALTOR® will work with you and the contracts they use to make an offer on the house. Such documents include numerous sale conditions and their wording should be carefully reviewed to assure that they reflect the terms you want to offer. REALTORS® can explain the general contracting process as well as his or her role.
Your REALTOR® will also work with you to help with the following:
Step 8: Get Insurance
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Title insurance
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Homeowners' insurance
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Flood insurance
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Home warranties
Insurance policies and warranties have limitations and individual programs have different levels of coverage, deductibles and costs. For details, speak with REALTORS®, insurance brokers and home builders.
Step 9: Closing
What to expect.
Settlement is a brief process where all of the necessary paperwork needed to complete the transaction is signed. Closing is typically held in an office setting, sometimes with both buyer and seller at the same table, sometimes with each party completing their papers separately.
Whatever the case, the result is that title to the property is transferred from seller to buyer. The buyer receives the keys and the seller receives payment for the home. From the amount credited to the seller, the closing agent subtracts money to pay off the existing mortgage and other transaction costs. Deeds, loan papers, and other documents are prepared, signed and filed with local property record offices.
What you need to do.
One of the best parts of settlement is that buyers and sellers need to do very little. Before closing, buyers typically have a final opportunity to walk through the property to assure that its condition has not materially changed since the sale agreement was signed. At closing itself, all papers have been prepared by closing agents, title companies, lenders and lawyers. This paperwork reflects the sale agreement and allows all parties to the transaction to verify their interests. For instance, buyers get the title to the property, lenders have their loans recorded in the public records and state governments collect their transfer taxes.
Step 10: What's Next?
- Hold on to your documentation
- Transfer utilities
- Contact the local property records office and confirm that the deed has been transferred
- Move In
- Take photos or video to record your possessions for insurance purposes
- Maintain insurance
- Enjoy owning your home
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