Most people have no idea what they’re getting into when buying a house, making the process intimidating. Understanding how the process works will help reduce feelings of being overwhelmed. Below is a general outline of steps to purchasing a home.
STEP 1: Prepare the money.
It goes without saying that purchasing a home takes a lot of money. Getting this money together takes time and preparation. Most people need to obtain a mortgage to purchase a home, which means taking on a large debt. Although obtaining a mortgage is easier than people think, it is wise to situate yourself to ensure you get the best deal. Meeting with a Home Loan Advisor ahead of time can help you plan for the proper loan type and help you get a good rate.
What’s more is this reality – you cannot place an offer on a home without a pre qualification letter from a lender. Getting your ducks in a row prior to looking for a home is required.
PRO TIP: Ask your mortgage professional about a “Pre Approval” instead of a “Pre Qualification”. Getting pre approved can put you in a much better spot!
STEP 2: Find an advocate.
Buying a home is a lot more involved than buying produce. You need to do more than see it and feel it. Asking important questions will help you purchase the right property. When was it built? Is it in good shape? Does this neighborhood meet my needs? How do you navigate the legal liability between you and the seller?
Those are just a few of the tough questions you’ll need to have answered. It’s always a good idea to have a wise advisor, a realtor, help you find the best home. They can protect you from pitfalls along the way.
Not all realtors are created equal and some people prefer to use a tech company instead. Be sure to check out this blog to help you choose the right advocate/realtor.
STEP 3: Find the home.
Now the fun begins! Armed with your pre-approval (from step 1) and your realtor (from step 2), it’s time to find your home–one that is financially within your means and meets your homeownership dreams. This process may take a few hours or a few weeks. Either way, having your realtor with you as you tour each home, and staying in communication with your Home Loan Advisor will help make the process smoother.
STEP 4: Agree to terms with the seller.
Once you’ve found a home that you like, you must send an offer to the seller. The seller will then look at your offer and choose to accept, decline, or negotiate. If the offer is within reason of the seller’s needs, they will likely respond with a rebuttal rather than an all-out denial of your offer.
This back and forth is typically done through realtors using legal paperwork to protect everyone’s interest. Once you and the seller come to an agreement, you are officially “in contract” and must get to work to make the purchase final.
PRO TIP – A great way to make your offer to a seller more attractive is to get a pre approval as described above AND to work with a lender that can close quickly. The sooner you’re able to close, the more likely you are to get your offer approved at your terms.
STEP 5: Get the money.
Preparing to get a mortgage loan is one thing, actually obtaining the mortgage loan is another. A lender is going to be lending to you hundreds of thousands of dollars. As a result, they are going to require you to prove your ability to repay. This requires gathering documentation and answering questions. But have no fear, a wise home loan advisor can make this process easy!
Once you are “in contract” on a home, you must alert your lender right away. This is crucial. This allows your lender to get started, ensuring a quick and smooth loan process.
The mortgage process has several stages. You can review these here. What’s important to note is that this step and the next step (Step 6) happen simultaneously. A lot of things will be happening in this stage. So, be sure to follow this list of Do’s and Don’ts to keep things moving in the right direction.
STEP 6: Make sure the house is good.
As mentioned above, this will be happening as you are also working on getting your loan together. Step 5 is all about the money. Step 6 is all about the home. This is where the realtor helps you get inspectors together to make sure the home is in good shape. In most cases you have 10 days in your “due diligence” period to go through the home and make sure this is the right space for you.
Your realtor will walk you through other legalies like getting set up at a Title Company and providing the needed information to set up utilities and other items. That way you can hit the ground running when the transaction becomes final.
STEP 7: Close the deal.
Once the lender has fully approved the loan from Step 5, and you have confirmed that this is the home for you from Step 6, the final legal paperwork will be delivered to the Title Company for closing. This is where you sign the final loan, contract, and home ownership paperwork required to make the transaction final. CONGRATULATIONS! You are now a home owner, it’s time to celebrate!
PRO TIP – Do not schedule movers or any customized work to be done on the home until after this step is complete. Note, I said after this step is complete. That means you should not even make the call to get it on the calendar till the keys are in your hand. All too often the closing date will be moved due to various circumstances. Rescheduling movers and contractors is less than ideal. Having the patience to wait until the home is officially yours is wise.
Now that you know the process, you are better prepared to buy a home! Schedule an appointment below to meet with a wise Home Loan Advisor to walk you through these steps and help you find an awesome realtor.