Here’s what the home-buying process looks like:
1. Get prequalified– To buy a home you will most likely be taking out a mortgage to do so. Therefore, a lender needs to tell you how much they are willing to lend you. So the first step you take is calling a lender and finding out how much that is. Nothing is worse than going to see homes, falling in love with one, and then finding out that you can’t afford it OR that you were completely underestimating how much you could afford and realizing you could actually buy the home of your dreams! When you call a lender, they will ask you questions about your income so be prepared for that. Be sure to ask them to email you AND your realtor the pre-qualification or pre-approval letter (I can explain the difference later or ask them to explain- lenders are nice people and love to help!). Overall, the phone call takes about 15-20 minutes. They WILL check your credit. If you’re a serious buyer then this shouldn’t matter. A pre-qual lasts for about six months so if you are not prepared to buy, be careful. Inquiries on your credit score do hurt your credit; HOWEVER, when you have multiple inquiries within a few days I’m pretty sure they don’t count all of them since they realize you’re probably shopping around for a loan. (DO NOT QUOTE ME ON THIS. ASK A LENDER!) It’s important to shop around for a loan! Call a few lenders (you don’t have to) and see what they’re willing to lend you and the interest rates they are offering you. I was prequal’d once and the next lender I called offered me DOUBLE. Yup, double the money. Shop around, you will be stuck with it for many years!
2. The next step is to tell your agent want you want in a home. I make that easy for you. Just fill this form out:
That’ll tell me what you guys are looking for in a home so I can start a search and send you places that match your criteria. I have access to TWO MLSs. Most realtors use only one so take advantage of me!!
3. So now we go on showings. We take as much time as you need here with no pressure. This could take 1 day, 1 week, or 3 months. The important thing is that you find a home you’re happy with.
4. When you find THE ONE, that’s when we make an offer. Before we make an offer though, I draw up a comparative market analysis (or CMA) which will tell us what the home is worth. You use that to make whatever you offer you would like. A lot of people think that whatever price the home is up for sale for is what you have to pay. Negative. It’s like buying a car. If it’s for sale for $50,000 and you want to offer $20,000, you go right ahead and do that. It may not be accepted, but the point is that you can offer what you want. The great thing about a buyer’s agent is that they do the negotiation for you. So if any negotiation was needed (it is most of the time) that’s what I do in this step.
5. Apply for a mortgage- [This is after your offer is accepted] Yes, you have a pre-qual, but you haven’t officially applied to get the mortgage. This is where you give the lender all the documents they ask for and they send in your application.
6. Inspections- When you buy a home, you want to get an inspection done. Usually when you put in an offer, you make it depend on whether it passes inspections or not. A home inspector comes out, looks at the property and tells you every single little thing that’s wrong with it. Costs around $500 cash that comes out of your pocket. If there’s anything wrong with the house, we determine who’s going to fix it (again, this is where I negotiate). You can ask the seller to fix everything or fix only some things. If they don’t want to fix it, you can step out of the contract and are not obligated to buy it. There are many different inspections to choose from on top of the general home inspection. For example, you can choose to test for lead if a home was built before ’78 or you can choose to test for radon too.
7. Pack and prepare for settlement– No need to repeat that! After inpsections, you’re really just waiting for your mortgage to be finalized so you pack during this time. If you’re not waiting on your mortgage then really you can close as soon as you have everything packed and ready to go.
8. Closing. The day of closing you will do what’s called a pre-settlement walkthrough and walk through the house you’re buying one last time to check for anything you may have missed before. The example I always give is that maybe the owner packed everything up and now where the dresser used to be there is a big hole in the wall that you didn’t see before. Things like that… Although sometimes it can be a little more serious than a hole in the wall. Then you go to closing. Buyer chooses closing location. It could be at your agent’s office, the other agents office, or a title company. A title agent is the person that does the closing. Sometimes it’s a lawyer which is better in case there are any problems at closing that you need a lawyer for. Oh and you get your keys here!!
And that’s it!