Buying a home is a challenging and emotionally-charged process – it is where you want to set down roots, if not for the rest of your life, then for some years to come. It can be easy to browse listings online and assume it’s as easy as going to a showing and making an offer, and then voila, you’ve secured your new home. The house-buying process can be complicated, though, in regards to finances, negotiations, and finding the right place for you.
The real estate agents at Inman Torres and Company are here to help you navigate through the turbulent waters of buying a home. We’ve broken down the key steps of buying a home to arm you with the information you need to step into the house-buying journey with an educated outlook and professional guidance from one of our real estate agents.
#1. Determine If You’re Ready To Buy A Home
Preparation is key to buying a home. You need to ensure that you’re both emotionally and financially ready to make this commitment. Buying a home means putting down roots and less flexibility with your living situation, as well as necessitating financial security and being able to afford a mortgage, repairs, maintenance, and all other expenses associated with homeownership, such as homeowner’s insurance. How you answer these questions will help you determine whether or not you are ready to buy a home.
#2. Calculate What You Can Afford
So, you’re definitely ready to buy a home. The next step is to calculate how much house you can afford. You’ll need to assess any current debts, your income, your credit score, and consider how much you can afford to spend on a monthly mortgage. While when you rent, your landlord will typically be responsible for repairs and maintenance, with homeownership, those responsibilities fall onto your shoulders. You’ll also need to pay property taxes, homeowner’s insurance, and other such expenses. These will help you determine what you can afford to pay for a home and narrow down your search.
#3. Save For The Down Payment
While there are cases where you can close on a home without a down payment, those are rare. Most lenders require a down payment in the event that you default on your mortgage, and you’ll also need to pay closing costs, which are the fees needed in order to get the loan. The kind of home loan you get will impact the minimum down payment you’ll need to pay. While you can pay less than the traditional 20% down payment, a smaller down payment will result in having to pay mortgage insurance. Through savings accounts and investments, you’ll be able to save up in order to afford the down payment on your home.
#4. Get Preapproved For A Mortgage
A preapproval letter will help your real estate agent find homes that are within your budget. It will also tell you how much you can actually spend on a home. To get preapproved for a mortgage, you’ll need to apply with your lender and answer questions about your assets, your income, the home you are interested in buying, as well as a credit check. Checking with multiple lenders or mortgage brokers before deciding on who to work with and what kind of loan you want will increase your chances of obtaining a lower interest rate on your loan.
#5. Find The Right Real Estate Agent
Your real estate agent looks out for your best interests throughout the home buying process. They’ll find you homes within your budget that fit your criteria, schedule your showings, and help you negotiate offers and counter-offers. While it’s possible to buy a home without a real estate agent, this is strongly discouraged, due to the fact that buying a home is an incredibly stressful process that can get complex, emotional, and you could end up overpaying without an agent in your corner negotiating for you and advising you on your best options.
You don’t want to work with just any real estate agent. It’s worth it to take the time to interview a few in your area to assess their experience, personality, and communication skills, to ensure that you are a good fit and can work together well over the next few months.
#6. Go House-Hunting!
This step is both the most fun and one of the most stressful parts of buying a home. Pictures in listings don’t give you an accurate picture of the home as a cohesive unit or the surrounding neighborhood with its surrounding amenities. When you go to showings, make sure that you take pictures, so you can remember what you liked and didn’t like about each house. The more open your schedule, the easier it will be to go to a showing when a potentially great home goes on the market, giving you an edge over other buyers.
When house-hunting, it’s helpful to rank your priorities and share them with your agent. You may not be able to find the ideal home, so knowing what features don’t matter as much to you is helpful in the event you need to make compromises, though it’s certainly possible to find your perfect home, it just may take a while sometimes. Your agent will find you homes that fit your priorities, and help you with any questions you have along the way.
#7. Make An Offer
After you’ve found the home you want, you’ll need to submit a written offer letter which includes details such as your name and current address, the price you are offering to pay, and a deadline for the seller to respond by. Your agent will help you with your offer letter and can even write it for you. In many cases, offers include earnest money deposits, also called good faith money, which is a small amount of the purchase price that goes towards the down payment and closing costs. From here, a seller will either accept or reject the offer, or make you a counter offer that your agent will help you manage negotiations for in order to reach a fair selling price. If they accept your offer or you reach an agreement, you can move on to the next step in buying a home.
#8. Get A Mortgage
Unless you’re able to make an all-cash offer, you’ll need to get a mortgage. This step involves a lot of paperwork and proof of income, personal information such as your Social Security number, W-2 forms from the past two years or more, and more. Everyone has different priorities when it comes to choosing a mortgage from low interest rates to stable payments and more.
#9. Get A Home Inspection
In most cases, purchase offers are contingent on home inspections. You’ll typically be the one who needs to pay for a home inspector to come to the house you want to buy and check for any damage and repairs that need to be done. Depending on what they find, you may decide to back out of the deal, negotiate any repairs or credits with the seller, or simply move on to having the home appraised before closing.
#10. Get A Home Appraisal
Your lender will have an appraiser analyse the house you want to buy in order to determine its value. If the house’s value is found to be less than the selling price, you can renegotiate with the seller. If it is found to be fair or more than the selling price, you can go forward to the next step.
#11. Complete The Paperwork
Generally, your lender will appoint a title company to handle all of the paperwork involved in purchasing a home for you, as well as ensure that the person selling the home is its owner and legally can sell it.
#12. Close On Your New House
Finally, you’ll sign all the documents to complete the sale, and wait for your loan to be funded and the seller to receive their payment. Once all of this is complete, the house is yours and you’re free to move in.