Home Buyers' Guide
From pre-approval to closing, navigate the home buying process like a pro.
Whether it’s your first time buying a home or you’re a seasoned buyer, purchasing real estate is still considered to be a major life milestone. Why? Because the process is an emotional one with a lot of moving parts. Here we break down the home-buying process step-by-step to help you easily navigate through it all like a pro.
Step 1: What You Can Afford?
Buying a home is a major financial commitment. So, when you’re dreaming about “location, location, location,” don’t forget to think about PRICE. You'll want to be able to comfortably afford your dream home.
How do you find out what you can comfortably afford? We recommend that you obtain for a pre-approval with a mortgage lender. They will review your finances and run a credit check for income verification. A pre-approval is an offer from a mortgage lender to provide financing based on their determination of your finances and their underwriting guidelines.
It will outline the following details:
- Maximum purchase value of homes you can afford
- Type of loan (i.e. Conventional Mortgage, VA Loan, ARM…etc)
- Term of loan (i.e. 15 years, 30 years)
- Interest Rate (the cost of lending based on your terms)
- Amount of down-payment (Cash up-front)
It is very common in today’s competitive market for home sellers to require their potential buyers present a pre-approval when submitting an offer. The only time where a pre-approval might not be required is with an all–cash offer.
Documents that may be needed for a Pre-Approval or Mortgage Application
- Most recent paystubs for all jobs covering the most recent 30 days. Please be prepared to provide any future paystubs until your loan process is complete.
- Past two (2) years w2’s
- Past two (2) years 1040's with all schedules and pages as well as any business tax returns, ( if applicable. )
- Last two (2) months bank statements, all pages, for all bank and retirement accounts listed on your application
- Current mortgage statements, property tax bills, and hazard insurance bills for all properties owned, and any HOA statements, ( if applicable. )
- Complete disclosure package signed by you
- Divorce Decree or Child Support documentation, all pages, ( if applicable. )
- Your attorney’s contact information
- Your real estate agent’s contact information
- Method of payment for your appraisal fees
- Contract of sale for your new home, signed and dated by all parties( for Mortgage Application )
Step 2: Partner with a Real Estate Advisor
You want to work with a local realtor in the community or town you are interested in. They have market knowledge of what is selling in the neighborhood, can share hidden gems, and find you the home that best suits your needs. You will also want to know what kind of reputation they and their company have. Choose a trusted adviser with a great reputation for providing quality service who is attentive to your needs.
Here are a few ways to find a Real Estate Agent:
- Ask for referrals from family and friends.
- Contact the realtor posted on a for sale sign in a neighborhood of interest.
- Search for online reviews or testimonials of highly-rated realtors in the area.
- Use Social Media to see what the agents personality is like.
- Look through the agent directory of a local brokerage, like ours.
Step 3: Start Shopping for Homes
Once you have determined your price range and identified the location where you would like to buy, and have partnered with a local real estate adviser, you can FINALLY start actively searching for your dream home. The previous three steps have helped you focus and narrow your search, saving you from some unexpected surprises with potential financial consequences.
Here are a few things to consider when walking through a potential home:
- What sort of upgrades will the home need to suit my needs? And added cost?
- Which stores and services are conveniently located near the home?
- Does it have public transportation nearby?
- How long is the commute to work?
Your Real Estate Agent can identify sources of this information.
Step 4: Make an Offer
Congratulations! You’ve found a home that you love and want to submit an offer. Make sure you’ve got these things covered first:
- Set your price: Ask your Real Estate Adviser to provide a comparative market analysis of other homes sold in the area. This provides an indication of whether the home is priced right and if your offer is strong enough to be accepted. In a seller’s market, you may have to offer over the asking price to receive an accepted offer. Conversely, in a buyer’s market, you might actually be able to offer less—too low and the seller might refuse, too high and you may overpay and have buyer’s remorse.
- Show them the money!: The seller, rightfully so, will be interested in knowing how you will be paying for the home. Aren’t you glad you got a pre-approval? It’s considered to be a stamp of approval from a mortgage lender that your finances and income have been verified, allowing you to proceed with a purchase. Make sure you outline how much your down payment will be, how you will be paying for it, and if there are contingencies.
- Set conditions: Give the seller a sense of urgency by setting an expiration date on your offer. This will prompt them to give you a response in a timely manner. Should they decline your offer, you can move swiftly to finding another home and make an offer on it before sells to someone else. Do you want to make sure the seller moves out by a certain date? Are there repairs needed that you want the seller to take care of? Was there something you loved in the home that you want to ensure stays there when you move in? Mention it all!
- Understand: Even an acceptable offer does not protect you. Only a fully executed contract and down payment received and acknowledged by the seller’s attorney to your attorney carries a measure of assurance.
- Attorney Review: Once you have an acceptable offer contract, it’s recommended that you hire a real estate attorney to review the seller’s contract to negotiate on your behalf when appropriate.
A seller will not want to risk declining other offers and keeping their home on the market longer if there’s a possibility that you can’t follow through with your deal. So, don’t skip these steps!
Step 5: Schedule a Home Inspection
Schedule a home inspection immediately after you have an acceptable offer. Is the house a Ranch, Cape, or Colonial? You would ideally like to find an inspector that is familiar with the type of home you are buying. It’s an added bonus if they are familiar with the neighborhood as well. Their familiarity with the home or neighborhood will help them identify and pinpoint key things that you may want to negotiate. Each home has its own nuances, so this is also a good time for you to get acquainted with the house. Having the inspector next to you to answer any questions could save you time and money in the long run.
Step 6: Prepare for Closing Day aka Move-In Day
Usually, from contract to closing, it’s a pretty straight forward process where the agent, mortgage lender and your lawyer take over most of the next steps.
This is what you can do in the meantime:
- Look over your home appraisal for any errors.
- Shop around for home insurance.
- Set a reminder to establish utilities before your move-in day.
- Set a reminder to cancel your current utilities before move-out day.
- Get a list of all things you need to change your address on.
- Start on a moving checklist.
- Stay in contact with your lender and lawyer to ensure that there are no delays.
When you finally get to the closing table, you’ll be ready to move into your dream home with no surprises!