Buying a home can be an overwhelming and confusing process. However, it can help if you know the steps to buying a first home and are familiar with what’s involved from the start. Also, the steps to buying a first home are usually standard from location to location, even if they’re not completed in the same order. If you want an excellent primer on getting prepared for the home buying process read our First Time Home Buyer Tips article!
Here are ten simple steps to buying your first home, a general guideline to take you through the process.
Work with one of the top-flight agents on The PRO Team, duh! Seriously though, do your research just like you did when selecting a mortgage lender. Talk with people you know who bought or sold a home; understand their experiences working with a real-estate agent. Narrow down your list and determine who you are comfortable leading you on your home buying journey!
Once you have your finances in order, then get pre-approved for a mortgage before you start the property search. Pre-approval will keep you realistic about what you can afford and gives you purchasing power to put in an offer on a home immediately. If there are several buyers after a property, having your finance pre-approved makes you more of an attractive prospect.
With your mortgage pre-approved you’re now ready to find your dream home. But finding the right home can take a while, especially if there are fewer houses around for sale, and more demand from buyers. If you want a reasonable price, then you may have to widen your search area or be more patient for the right opportunity.
In the meantime, it’s a good idea to visit as many open houses as you can, to get a feel for the market and what’s available. You may get lucky with a seller who doesn’t mind lowering the price for a quick sale, i.e., owners who are getting divorced, relocating or renovating another property and need the cash.
Enlisting the help of an agent can shorten this process if you give them a detailed outline of what kind of property you want and what features are non-negotiable, e.g., your top 5 ‘must-haves.’ If an agent has you on their books, they may be able to show you homes that are new to, or not on, the market yet.
You chose a house you love and want to attempt to purchase. Tell your real-estate agent you would like to make an offer. They will run some market analysis on the property to help you submit a fair and robust offer to the seller’s agent. Making an offer on the house, then waiting to be accepted, is probably the most stressful part of the process.
Take heart, even if you don’t win the first home you make an offer on, the experience you gain will help you with the next one you find.
You may receive a counteroffer on your original offer from the sellers. In this case, you will work with your agent to negotiate the final terms of the purchase agreement and final selling price; once both parties agree, it’s time to sign a purchase agreement. This is a legal document with all the information about the sale of the property; name of seller & buyer, the final purchase price, the closing date, and other legal details.
Once this is signed, then you can finalize your financing by submitting a refreshed mortgage application to the bank and waiting for it to be approved. You will also get a breakdown of all the other costs, such as insurance or property taxes you’ll need to pre-pay.
There will likely be an agreed-upon inspection period in your contract with the seller, so be sure to schedule an inspection with a reputable home inspector in your area to do a thorough investigation of the home. Once the inspection is complete, the inspector will provide you with a list of findings. With this list of findings, you can take the issues as-is or request the seller to address some or all of the findings. Be cognizant of not being too nit-picky on small items, but be careful of potentially significant issues, such as structural issues!
You won’t need to do much here, as your mortgage lender will likely take care of this for you. Your mortgage company will want to verify that the loan amount and the value of the home match or the appraised value is higher. Failure to appraise the home can be a trigger to terminate or renegotiate the purchase agreement with the seller.
You will next receive a title commitment from the title company which means that they will provide a title insurance policy for the property after closing. This commitment will protect you and the lender from unknown issues affecting the home’s title.
If you followed the steps in our First Time Home Buyer Tips article or downloaded our Home Buyer Workbook, this next step should be a cake walk! At this stage, you will want to ensure you get all of the requested documents over to our lender to avoid any delays in your financing for closing.
All that remains is to perform a final walk-through of the property before the closing date to go over any final details – such as chattels and cleaning, – and if everything’s in order, then the deed is signed over, and you become the proud owner of a house. Congratulations!