10 Step Home Buying Process
Before someone begins the home buying process, it’s good to get an idea of the steps that need to be taken in order to create a successful transaction. The home buying process is a very involved process, and being organized and committed are crucial. And of course, hiring a full-time, licensed REALTOR also helps. I’ll talk about how a Realtor can help as I discuss each step:
Home Buying Process
1) Check your credit reports – Are you currently working with a lender? If not, I know several very good mortgage bankers and brokers that can help my clients pull their credit reports and find their credit scores. This normally doesn’t cost anything. If you find an issue that needs to be addressed, then it would be a good idea to work with a credit repair consultant. These consultants are professionals, and are very good at helping you repair your credit and increase your credit scores. This will help when its time to get a mortgage.
2) Get Pre-Approved for a mortgage – This process involves having you and your entire financial background analyzed by a loan underwriter. Their job is to make sure that the borrower meets certain guidelines and can be approved for a mortgage. The underwriters will ask for many documents, like tax returns, pay stubs, and bank statements. Give them everything, and do not ever try and hide something from them. Be up front and honest, to prevent problems from happening later. Your lender will also advise you on how much your mortgage payments should be and how much your loan can be approved for. Let’s be honest, a buyer should not start looking for a home unless they are pre-approved.
3) Set up your home buying criteria – Consider where, when, and what you are looking for, and all of the things you want your home to have. It helps to have “must haves” and deal breakers included.
4) Hire a Buyers Agent – A Realtor should be an expert in the area. They should know what is going on in the area, and how the homes are different. They will be able to assess your ideal home with what is available on the market, showing your properties that will closely match your criteria and not waste your time. Hiring an agent that is able to show you homes, analyze the market, and have great communication with you is critical.
5) Pick out your next home – Oftentimes, the first home you see could be the home you buy. Sometimes you’ll have to see several, but once you have a realistic idea of what you are looking, and the right home in the right location at the right price is available, you’ll be ready to make an offer. You’ll just know it’s the right house. Think long term and envision your life at the property.
6) Make an offer to buy the property – Homes sell based on a market value, that is, what a buyer is willing to pay for the home. Your Realtor will be able to analyze the market activity to see what recent homes have sold for, which will predict what current buyers are most likely willing to pay in today’s market. There are several different ways to make an offer, but the offer needs to be good for you as the buyer. If you feel bad or have buyer’s remorse, that is not a good offer. Buyers purchase homes based on emotion and need to remember to be objective as well. A Realtor will work with the seller’s agent to get your offer accepted.
7) Use your Option Period to get an inspection and do your Due Diligence – Once your offer and terms have been accepted by all parties, you will have a limited amount of time to do you homework on the property to make absolutely certain that this is the right home for you. It is critical to know what you are buying, so hire a certified home inspector and any other tradesmen to evaluate the condition of the home. By the end of your option period, you should have no more unanswered questions about the property. Your Realtor will assist in gathering all information to help you make an informed evaluation.
8) Renegotiate Terms – Before the option period ends, the buyers have once last change to renegotiate terms of the purchase before deciding whether or not to back out of the contract. It is a very common strategy for a buyer use the inspection report as leverage to request additional repairs or price reductions from the seller.
9) Get an appraisal – As soon as your contract has been accepted (the first time), it is important to make sure your mortgage lender has a copy of the contract so they can analyze the home and begin to structure the loan. An important element to this process is that the lender will order a home appraisal. The lender will not offer a mortgage if they feel the buyer is overpaying. It is important to make sure the appraisal will occur as soon as possible.
10) Closing – Once all final terms have been agreed by all parties, the home purchase is on the way to the closing table and keys will exchange hands. It’s important to continue to work very closing with your lender and you Realtor to make sure everyone has what they need. There are many moving parts to a real estate transaction, so everyone will have to communicate very well with each other to get the deal done. Many people ask how long does it take to buy a home? If you follow these steps, it won’t take very long and you’ll be living in your new home sooner than you think.
If you have any questions about the home buying process, or you want to learn more about hiring me as your Realtor, please contact me. I look forward to working with you.