The process of buying a home can be confusing and challenging. Being prepared is the key to a successful transaction. Follow these steps to ensure that you understand what’s involved and get ready to dive in.
- Research Locations. What area would you like to reside in? Do you need to be close to your job or public transportation? Close to schools and parks? Are you looking for a single-family, a duplex, or a condo? Maybe you’d like a lakefront home or an investment property. Know what you are looking for, but be open to towns and ideas—research prices and taxes in areas that interest you. Begin to narrow down where you would like to look and have an idea of what you may need to spend.
- Get Pre-Approved. A pre-approval will be needed to begin actually looking at homes for sale. You will provide your financial information to your lender. They will let you know what your buying power is. This will further help to narrow down your home search. You may need to start with a fixer-upper instead of turn-key, a condo instead of a single-family, or spend some more time saving for the home you really want.
- Look at Homes. Open Houses are a great way to get in to see homes and see what each town offers at different prices. Here, you may find a Realtor you’d like to work with. Or, you may know someone in real estate. Either way, it’s imperative to find a Realtor that knows the areas you are looking in. They can give you a heads up to homes coming on the market and the pros and cons of certain streets. Being comfortable with your Realtor is also essential, as you will be spending a lot of time together. Get ready to spend most weekends house searching until you find the one that checks all (or most) of your criteria.
- Make An Offer. When you finally find a home that will work for you and your needs and is in your budget, the real process starts. With your Realtor, you will come up with your offer price and terms. Once you have arrived at a number you are happy with, your agent will submit it to the listing agent. They will then speak with the sellers. In most cases, unless you have offered the asking price or over, expect a counteroffer. You may accept or continue to negotiate until both sides have agreed upon a fair market price.
- Get into Attorney Review and Under Contract. Once both parties have agreed to and signed the contract, you enter attorney review. Here, your attorney works in your best interest to make sure the deal is fair to you. The attorneys will send out riders with some changes to the contract. They may go back and forth until, once again, both parties agree on the terms of the agreement. Once both parties have agreed and the attorney review concludes, the home is then under contract.
- Perform Inspections. During the inspection period, you will schedule a home inspection to see any issues with the home’s major systems. The inspector will provide a detailed report on their findings. Expect information on the roof, electrical, plumbing, foundation, etc. If there is a septic system, you will need to schedule a separate inspection for that. If any trouble arises in any of these systems, more negotiations will take place. You may ask for the problems to be fixed by the seller before closing or a credit to fix them on your own after closing.
- Has an Appraisal Completed? Your lender will schedule an appraisal to be done on the home you are buying. This is to make sure that the home is worth what you are paying for it. Your Realtor will meet the appraiser at the house. The appraiser will look through and around the home, taking a count of bedrooms and bathrooms, the home’s condition, and the size of the home and lot. Usually, your Realtor will provide some comparable homes that have recently sold in the area to justify the price that has been agreed upon in your contract. Once the appraisal comes in, it may be high, low, or right on point. If the appraisal came back high or on point, that should be fine for you. This means that the bank will loan you the amount that you need. If the appraisal comes in low, it means they do not think the home is worth as much as you want to borrow, and they will not lend you the money. At that point, you would either have to renegotiate with the seller to sell it to you for less, or you will need to come up with more money out of pocket.
- Finish the Loan/Title Search. Once you have gotten through the inspections and appraisal, it’s time to finish the loan and get your mortgage commitment. They may ask you for a couple more documents and then release the mortgage commitment, which you will need in order to close. A title search will also take place. The title company will make sure that the seller can sell the home with no problems. They will search for unpaid taxes, liens, and other ownership issues. Once there is a clear title, they will be ready to transfer the title to you, the new owner.
- Final Walkthrough. Almost there! The final walkthrough takes place within 24 hours of closing. You will meet your agent at the home to ensure that the home has been left exactly as agreed upon. It should be in broom-swept condition. The sellers should have left whatever was decided upon and taken whatever was agreed upon. If there is a problem, hopefully it can be resolved before closing. Otherwise, the closing may be delayed until it is resolved.
- Closing. At the actual closing is where you will meet with your attorney and Realtor to sign a pile of papers. It’s a great time to reflect on what it took to get to this point. The closing doesn’t take too long, and you leave with the keys to your new home! You did it!!
There is just no other feeling like leaving that closing table. Homeownership is something to strive for and be proud of. As long as you use professionals that have your back along the way, your whole journey of buying a home and all transaction will go as smooth as possible.