How the Home Buying Process Works From Start to Finish

Are you thinking about buying a home this year? Tired of paying someone else’s mortgage? So, you want to buy a house—now what? The first time buying a home can be an emotional, exciting, and also exhausting experience. You may also be wondering along the way, what am I missing? This is a common question. Below, is how the home 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 wants and needs list with your realtor.
• 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. Better yet, reach out to a mortgage broker who can give you all the details and much more accurate numbers for your situation than any online calculator will.  Fannie Mae recommends buyers plan to spend less than 28% of their total income on housing.
• 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. You can start with your current bank, but make sure you check out competitor banks & mortgage brokers 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. Just because you are approved for it, does not mean you can afford it-you don’t want to end up house poor.
• Save your pennies. At least 3-5% to be precise. Many first-time home buyer programs offer minimum down payments as low as 3% to 5% (vs. the standard 20%), and a few require no down payment at all. Of course, the better your credit score and DTI (debt to income) are, the more favorable terms you will get from your lender.
• 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 an agent they recommend.  You can also start your search online by looking for your local expert and searching agent reviews. 
• 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 based on your wants and needs list. It is important to give your agent detailed feedback so they can show you homes that are perfectly suited to you. Sometimes, this process can take months to find the perfect home. Also, your real estate agent should have access to homes before they hit the market through their own personal network. This can be very helpful in a market with very little inventory.
• 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.
• Negotiations. The goal here would be to present an offer to the Seller that that is so well written it does not require a counter offer and is just accepted. However, you should 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 an earnest money deposit to an escrow account to show good-faith. Escrow is typically about 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 that can’t be negotiated.
• Do a home inspection. Even if the home appears to be flawless or brand new, 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. If you can’t come to an agreement, you will likely have the option to withdraw your offer and get your earnest money back.
• Closing. When your negotiations with the seller are successful, and the inspection contingency is released, you should be ready to close. At your closing, you will spend about an hour signing lots of paperwork and then receive the keys to your new home once it funds and records with the County.
• Moving out of your home and into your new one. This is a busy and exciting time! Have fun!

If you’re ready to buy but aren’t sure how to get started, check out some more homebuyer tips below.