The home buying process may seem simple at first. Just find the house you want and make an offer, right? Well, once you begin the process of finding that perfect home, you will quickly realize things are not as simple as they seem. There are many aspects to the home buying process, and most of which can easily become confusing or difficult to understand. Navigating the home buying process so it is easy and pain-free takes experience and knowledge beyond the seemingly simple pre-buying perspective.
With that said, here are 12 steps you need to understand in the home buying process.
Most home searches nowadays begin online. Start searching online, and even offline, for homes that interest you. Monitor how long they stay on the market. See what is available in the price range you have in mind. Take note of how prices change and look at all these factors in the location you desire. The more you research, the more educated you will become, and the easier the home buying process will be for you when you are ready to buy a house.
The price listed for a home is not the final say on affordability. There are several factors consider when budgeting for a home purchase. Most lenders recommend buying a home that costs about three to five times your annual income – that is, if you plan on making a 20% down payment. Everyone’s financial situation is different, however. Along with income, you should also consider your current debt and expenses and determine how much you can afford on a monthly basis, which will depend partly on how your mortgage loan’s interest rate affects it.
Once you determined your home-buying budget, it’s time to look into a mortgage loan. Interest rates are vitally important in the home buying process, and the right lender can make all the difference. A mortgage banker will asses all of your financial information and your credit to establish how much the bank can lend you and to determine an available interest rate with the loan. Based on the market and your financial situation, your mortgage banker can “lock in” a rate for you for a period of time, often 30 days. This part of the home buying process helps you determine exactly how much you can spend on a home and assures you of a desirable interest rate while you search for the home you want.
All of these steps in the process can begin to seem daunting and more confusing as the momentum builds toward finding the perfect home. That’s why this step is perhaps the most important: finding the right realtor®. Experienced realtors® understand the home buying process well. A good realtor® has developed negotiating skills, familiarity with the area you wan to live in, and the knowledge and information needed to make the entire process seem effortless. They consider schools and neighborhoods, using the right lender, and working with a trusted title company. Finding the right realtor® is vital to buying the right home at the right price. Best of all, it doesn’t cost you anything to use a realtor®. They are compensated on commission paid by the home seller.
Start looking at and visiting homes in your price range and desired area. You may have a list of things you want in a home, but pay attention to the details of the homes you visit and take note of features you like and don’t like. Take photos and video if necessary. Let your realtor® know what you want and look at several homes to get a clear picture for both of you. Visiting houses also gives you a chance to check in person for issues or problems that may not be known or disclosed. It also lets you see the neighborhood, surrounding homes, streets, and nearness to places of interest.
Once you find a home you love, inform your realtor® that you’d like to make an offer. This is another step in the process in which you will benefit from an experienced realtor®. While homes are listed at a specific price, your agent can negotiate a fair offer based on comparable homes and the information gathered through a little investigation. Once you make an offer and it is accepted, the house will go into escrow to complete the remaining steps of the home buying process.
Getting a home inspection is the next step in the home buying process, and it is vitally important. An accepted offer does not necessarily mark the final say in the purchase price of the home. A home inspector will check the property for any structural damage or things that need to repaired. You can decide if you’d like to renegotiate or withdraw your offer if damages are found. You may even negotiate to have the seller handle the repairs before the sale is complete. Your realtor® can assist you in this by providing a trusted home inspector.
Not all home loans are created equal. Do you want to have the lowest possible monthly payments? Do you want to have payments that never increase? Are you planning on moving in a few years? These are just a few of the factors to consider when choosing the right loan. There are many competitively priced home loans. It is important to choose that one that best fits your needs and has a desirable interest rate. A good lender can help you determine which loan is right for you.
Your lender will also have a third-party appraiser provide an estimate of your new potential home. This will help you and your agent know you are getting a fair price for your home. If the appraisal comes back much lower than expected, then you can look into the possibility of renegotiating the price to be more fair with the estimate.
Most experienced realtors® will work with your lender to use a trusted title company to handle all of the paperwork – and yes, there is a lot of paperwork. A title company is necessary because the handling of important legal documents comes with countless details that need to be addressed to make sure you are taking rightful ownership of the home.
When it comes time to close on your new home, you will sign all of the necessary paperwork and loan documents. Your realtor® will help you stay well-informed on the funding of your loan, which can take a couple of days to complete. Once your home loan is funded and the check is delivered to the seller, the home is now yours.
Buying a home is a monumental occasion in anyone’s life and should be celebrated. It can be a tricky and sometimes long process, but the reward of the perfect home is worth the effort. Thank your realtor® and your lender for their hard work in the process and begin the move into your new home.
At MWT Realty Group, we’ve been through this process countless times. We understand how important it is to have experience and knowledge of the intricate inner workings of a home purchase. If you are looking to buy or sell your home, then give us a call. We’ll make sure you find the perfect home, at the right price, and that you enjoy the process.