The Home Buying Process in 7 Simple Steps:
Step 1: Figure out How Much You Can Afford
You can calculate how much you can afford by starting online. There are several online mortgage calculators that will help you calculate an affordable monthly mortgage payment. Don’t forget to factor in money you’ll need for a down payment, closing costs, fees (such as fees for, appraisal, inspection, etc.). An experienced home loan expert can help you understand all your loan options, closing costs and other fees.
Step 2: Find the Right Lender and Real Estate Agent
To find the right mortgage lender It’s best to shop around. Get recommendations from your friends and family. Talk to at least three or four mortgage lenders. Ask lots of questions and make sure they have answers that satisfy you. Make sure to find someone that you are comfortable with and who makes you feel at ease.
Once you have the right mortgage lender, make sure you at least get a pre-approval. Pre-qualifications are only a guess based on what you tell the lender and are no guarantee, whereas a pre-approval will give you a better idea of how big a loan you qualify for. The lender will actually pull your credit and get more information about you. However, you could even take it one step further by getting an actual approval before you start home shopping. That way, when you’re ready to make an offer, it will make the sale go much quicker. Besides, your offer will look more appealing than other buyers since your financing is guaranteed.
Step 3: Look for the Right Home
Make a list of the things you’ll need to have in the house. Ask yourself how many bedrooms and bathrooms you’ll need and get an idea of how much space you desire. How big do you want the kitchen to be? Do you need lots of closets and cabinet space? Do you need a big yard for your kids and/or pets to play in?
Once you’ve made a list of your must-have’s, don’t forget to think about the kind of neighborhood you want, types of schools in the area, the length of your commute to and from work, and the convenience of local shopping. Take into account your safety concerns as well as how good the rate of home appreciation is in the area.
Step 4: Make an Offer on the Home
Now that you’ve found the home you want, you have to make an offer. You can also get a list from your real estate agent to find out how much comparable homes have sold for. Once you’ve made your offer, don’t think it’s final. The seller may make a counter-offer to which you can also counter-offer. Somewhere, you have to meet in the middle. Once you’ve agreed on a price, you’ll make an earnest money deposit, which is money that goes in escrow to give the seller a sign of good faith.
Step 5: Appraisals & Inspections
A home appraisal is not the same thing as an inspection. If you’re buying a home, you’ll want to hire an experienced home inspector to point out any potential problems that could turn into costly nightmares in the future. Property appraisers will likely make note of any obvious issues, but they won’t test your heat and air, check the chimney, or determine if your plumbing is up to code. That’s the job of the inspector.
The appraisal report generally includes:
- an explanation of how the appraiser determined the value of the property
- the size and condition of the house and other permanent fixtures, along with a description of any improvements that have been made and the materials used
- statements regarding serious structural problems, such as wet basements and cracked foundations
- notes about the surrounding area, such as new or established development, rural acreage, and so on
- an evaluation of recent market trends of the area that may affect the value
- a comparative market analysis that supports the appraisal
- maps, photographs and sketches
Step 6: Close on Your Home
Setting the closing date that is convenient to both parties may be tricky, but can certainly be done. Remember that you may have to wait until your rental agreement runs out (if applicable) and the seller may have to wait until they close on their new house.
Be sure you talk to your mortgage banker to understand all the costs that will be involved with the closing so there are no surprises. Closing costs will likely include (but are not limited to) your down payment, title fees, appraisal fees, escrow fees, inspection fees, and points you may have bought to buy down your interest rate.
Step 7: Time to Move
You’re done. You’ve worked hard and saved long. You can now move into your new home. You’ll take on the task of hiring movers, packing boxes, and starting a new chapter in your life. If you’re lucky enough to have friends and family help you, you’re in good shape.