Have you ever wanted to buy a new home but didn't know where to start? If so, then you are not alone. Most first-time homebuyers have trouble understanding where to begin in this long and tedious process. Read below about the ten steps that you need to know when buying your first home!
1. Research Properties
The first step in the home buying process is to research properties in the area that you plan to live. It is always a good idea to look at what is available before you start moving through the steps of buying your first home. Websites like Zillow, Trulia, and Realtor.com are very reliable sources that will tell you what is listed in your target area.
2. Get Pre-Qualified
The next step in buying a new home is to get Pre-Qualified. This is done by contacting a lender and answering a few basic questions. Getting Pre-Qualified will help give you a better idea of how much you can afford for a new home.
3. Find a Great Buyers Agent
Finding a great buyers agent is the next step in the process of buying your dream home. Buyers agents add a lot of value because they know this process like the back of their hand. Their job is to help show you prospect homes, write contract offers, negotiate with the seller, handle earnest money deposits, recommend financing options, and assist in closing. Having a great buyers agent will make the home buying process smoother, faster, and easier!
4. Get Pre-Approved
Getting Pre-Approved is arguably one of the most important steps on this list. To get Pre-Approved, you will need to send your mortgage broker proof of your income, assets, and credit history. By doing this, it allows the bank, or mortgage company, to see how much of a loan that you can qualify to receive. This is not to be confused with getting Pre-Qualified. A good rule of thumb: Pre-Qualified = Educated Guess, Pre-Approved = Actual Approval.
5. Tour Listings
This is one of the most exciting steps of the entire home buying process. When you finally receive your Pre-Approval letter, you will know exactly how much of a loan that the bank is willing to lend. This makes it a lot easier for the buyer's agent to narrow down the home selection. Try looking for homes that best fit you. Is it more important to have a garage, or would you rather have more land? What about a three-bedroom vs. a four-bedroom? Are you looking to expand your family in the coming years? These are great questions to ask when touring homes. Also, you need to ensure everything works properly. A few pro tips include: Making sure all systems are working great (A/C, plumbing, electrical), checking all windows and doors, and analyzing the types of homes nearby.
6. Place an Offer
At this point, you have toured several homes and are finally ready to make an offer. Communication with your buyer's agent is imperative in this step. How much are you willing to pay? Are there certain contingencies that need to be in place for the deal to go forward? These are great things to think about when placing your offer. Remember, negotiation and patience are some of the key skills needed to be successful in this step.
7. Home Inspection
After your offer is approved and a contract is signed, you will then need to get a home inspection. Most states practice real estate under the idea of "caveat emptor", or "buyer beware". If your state operates under this system, the seller has no obligation to disclose anything related to the home unless it violates health and safety codes. Your buyer's agent should make the contract contingent upon a clean home inspection to help ensure that your time, and money, will not be lost in the process.
8. Get the Home Apprised
In most buying situations, your lender will require a home appraisal to ensure that you are not overpaying for the home by a large amount. The appraiser will provide a calculated estimate of what the property is worth. Although this number may not be the value down to the dollar, it will still give both you and your lender a great idea of how much the home is worth.
9. Sign Closing Paperwork
After you have had your home appraised, you will then begin what is known as the closing stage. This process could take anywhere between 3-6 weeks depending upon the situation. Closing usually includes things such as a title search, signing paperwork, and finalizing the loan. Closing costs can vary anywhere from 2% to 5% of the sales price.
10. Move In!
After all of the paperwork is signed and the title is officially transferred, you are now ready to move in. Congratulations, you are now the proud owner of your brand new home. Enjoy!