Congratulations on deciding that it is time to purchase a home.
NOW WHAT?!?
Purchasing a home is likely to be one of the largest decisions that a person will make in their lifetime, so having a pathway to follow will make the journey a little bit easier. Below I will outline the eight steps of the home-buying journey so that you can see the path before you. While each journey to home ownership is a little different, these are the general steps that will take you from meeting a Real Estate Agent to closing of your new home.
INITIAL APPOINTMENT WITH A REAL ESTATE AGENT
- While it is true that you do not require a real estate agent to purchase a home, it may be a good idea to have one. Most people only purchase a home less than a handful of times in their entire lifetime, so you may not be too savvy with the process. Having an agent that is familiar with the process and knowledgeable about the local area can alleviate a lot of stress for you. If you decide to use a real estate agent to guide you through the process, this initial appointment is a crucial first step in the process. In this meeting, your agent should go over the entire process and answer any questions you may have.
DECIDE WHAT YOUR WANTS AND NEEDS ARE
- Three main criteria that a buyer will consider when deciding on a home are its location, size, and price. Finding a home for the price you're comfortable with paying, the size you want, and in the location you desire are often the most important parts of the list. Other items, such as style and whether it has a garage or not, are just as important when establishing criteria for your home search. Remember that these wants and needs are likely to change, so ensure that you update your agent.
GET A PRE-APPROVAL FROM YOUR LENDER OF CHOICE
- With the amount of wants and needs that people have, it can be very easy to get off track when searching for the right home. Before you have your agent start showing you homes, it is a great idea to get a lender pre-approval. For one, it lets you know how much you can afford. The last thing anyone wants to do is fall in love with a home and realize later that it falls outside of their budget. Having a pre-approval letter will inform you of what you qualify for and help you determine your budget at the beginning of the process.
START LOOKING
- Now that you have established your budget and decided what your search criteria are, it's time to start looking at homes. If you're new to an area or not quite sure on the style you want, this part can become a process of elimination. As you become more in tune to what you're looking for, knowing what you don't want can be just as important as knowing what you do. Use this time to help refine your search and build a frame of reference. You can also spend time online looking at the results that seem to meet your needs and eliminate some choices. Your time is valuable, and using that process of elimination in the comfort of your home can streamline the process.
SUBMIT AN OFFER
- Once you've finally found a home that you like, it is time to submit an offer. Your real estate agent will do a comparative market analysis (CMA) to see what other recently sold homes in and around the area that your home have sold for. This can be used to help structure an offer that feels most appropriate to you, while considering current market trends.
- Offers generally come with a lot of paperwork, buy your agent will ensure that all required paperwork accompanies your offer. When the paperwork is sent for your review and approval, take the time to read them so that you thoroughly understand.
- Another thing your agent will mention is an earnest money deposit (EMD). It is a deposit that lets the seller know that your serious about purchasing their home. This money will be kept in a separate account and will go towards the costs of closing the transaction.
UNDER CONTRACT
- This time is commonly known as "in escrow". During this time is when contract compliance happens. Any contingencies, such as a home inspection or termite and moisture inspections, are completed during this time. Your lender will also be working with you as they go through the loan approval process.
- If a home inspection was a part of the contract, it will be performed during this time. The home inspector is hired by the buyer and involves a more thorough look at the home. This will help you have a better understanding of the property you are purchasing.
FINAL WALKTHROUGH
- Prior to closing day, it is a good idea to schedule a final walkthrough of your new home, although it may not be required. It gives you the opportunity to see that the home was left in a condition outlined in your purchase agreement and that the items set to convey with the sale of the home are present.
TIME FOR CLOSING
- Once all items of the contract are executed and met, and the lender has issued a mortgage approval, it will be time to close on your new home. It is at this time that the buyer and seller will sign the final documents. The closing date is likely negotiated at the time of offer, but it can be established by a closing attorney or escrow agent.
- Once all the paperwork has been signed by both parties, you will receive the keys to your new home. CONGRATULATIONS!
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