Six Steps to Buying Your First Home

    Buying your fist home can be very intimidating; especially if you are unfamiliar with the process. Realtors speak with numerous individuals everyday who want to buy a home but don’t know where to start. The purpose of this article is to outline the general steps involved in an effort to demystify the home buying process and provide our future clients with confidence as they prepare for this important investment. While this article may be helpful, every real estate transaction is unique and comes with its own set of challenges and for that reason it is strongly suggested that you speak with a Realtor and Mortgage Lender about your specific real estate needs.

    Six Steps to Buying your First Home

    1. Find a Reputable Realtor
    2. Decide How Much House you can Afford
    3. Search for the Right Home
    4. Make an Offer
    5. Perform Due Diligence
    6. Close on Your Home

    Find a Reputable Realtor 
    Once you have decided that you want to buy a home, the very first thing you should do is find a reputable Realtor. A Realtor is there to guide you through the home buying process and should be a wonderful resource for you as you are getting started. Your Realtor should be very familiar with the neighborhoods that you are interested in buying in, and should be able to provide you with accurate information about the real estate activity in your market. They should also be well connected in the community and capable of referring you to other outstanding real estate professionals such as Lenders, Home Inspectors, Title Companies etc. Above all else, make sure you Realtor is trustworthy. Even a less experienced Realtor who is trustworthy will most times have an experienced Broker that will be helping them, and that they can go to if they have questions.

    With the help of a Lender Decide How Much House you can Afford
    After you find a Realtor that you feel good about, the next step is to find out what you can afford to purchase. Although you may think you already have a good idea of what that is, I strongly recommend speaking with a lender and at least getting pre-qualified but preferably getting pre-approved for a home loan.

    Pre-Qualification – This is the initial step in the mortgage process and can usually be done quickly over the phone with a mortgage lender. Pre-qualification is when you discuss with a lender your income, debts, and credit, and the lender provides you with an idea of what you could qualify for. The main reason to get pre-qualified is so you don’t waste a lot of time looking at homes that are out of your price range.

    Pre-Approval – This is much more involved than pre-qualification and requires you to fill out an official mortgage application and provide the necessary documentation needed to verify and check your financial standing and credit history. Your paperwork will than be submitted to an underwriter who will provide you with a conditional loan commitment in writing that will provide you with a maximum loan amount. The main advantage of pre-approval is that you have essentially already been approved for your loan. This streamlines the purchase process, can save you lots of headaches and provide you with leverage when negotiating with a seller.

    Search for the Right Home
    Once you have found out how much you can afford to pay for a home, then comes the fun part – looking for a home! Again, having a competent Realtor that is familiar with the neighborhoods in the area you are searching can save you a lot of time. Sit down with your Realtor and list out the most important features you are looking for in a home and let them go to work for you. If you find homes on your own, whether through the Internet or out driving around, notify your Realtor and have them setup a showing for you.

    Make an Offer
    Once you find the right property the next step is to make an offer. After discussing the terms of the offer you would like to make, your Realtor will draft a contract for the purchase of the home and submit it to the seller’s listing agent. Typically there is some negotiating back and forth until you come to an agreement. Once you come to an agreement, the contract is signed by both parties, and the buyer submits their earnest money.

    Perform Due Diligence
    Once  you have a signed contract by both parties you are considered “Under Contract” and it’s now time to do your due diligence in order to make sure there aren’t any surprises with the purchase of your home. Being under contract essentially means that you have agreed in principal to the terms of the purchase of the home. This does not however mean that the sale is final, or that you are absolutely obligated to purchase the home. That will not happen until you close on the home.

    1. Inspection – An inspector will come inspect the home for any repairs that need to be made. If problems with the home are found during the inspection and the Buyers and Sellers can’t agree upon a resolution, the buyer may back out of the contract without loosing their Earnest Money.

    2. Appraisal – An appraisal is usually required by the lender. During an appraisal, an appraiser will provide a value of what he or she thinks the home is worth. Should for some reason you default on your loan with the lender, their remedy is to foreclose on the home and take possession of it. For this reason the lender wants to ensure that the home is worth what you are paying for it.

    3. Survey – A survey is done in order to verify where the physical property lines are of the property that you are purchasing, as well as to ensure that nothing has been built on a neighbors property or vice-versa. A Survey will also identify any conditions placed by law onto your property such as easements or rights-of-way.

    4. Title Search – A title search is done in order to confirm who has legal right to the property. It is also done to make sure there aren’t any judgments or liens against the property that could transfer to you with the purchase.

    5. Underwriting and Approval of the Loan (If not already Pre-approved) – Those individuals that are not pre-approved for a loan and haven’t gone through underwriting will need to have their loan approved before they can go to closing.

    Close on Your Home
    Once the necessary due diligence has been completed, the appraisal has been done and your loan has been approved, you are ready to go to closing and finalize the purchase of your home. Put simply, the closing is when you will sign all of the final documents and make the necessary payments to finalize the sale of the home.

    Now that you have finished with closing its time to celebrate, you are now a home owner!

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