Buying a home is one of the greatest and most fulfilling things that most Americans will experience. Home ownership is a rewarding, and one of the most powerful investments you can make. It can also be one of the scariest, confusing, and time consuming purchases you can make. There are so many factors in the home buying process, it can be quite overwhelming.
The first step in the home buying process is to decide that you want to actually own a home. Although the first step may be the most logical but probably is the most ignored. Once most people make that decision, they begin to “dream shop” online. There are popular websites like Zillow, Trulia, and Realtor.com that you can go on to get a feel for what’s on the market. You will begin to see varying sizes, styles, shapes, and amenities that will help you decide what type of house you’d love to live in. There’s just one problem, this is the WRONG WAY to start your search! Looking at homes and falling in love with them before knowing what you can afford is an easy way to end up disappointed, which leads me to step two.
The second step is to get prequalified. Now there are a couple of ways to go about this, however the most common ways are applying at a local bank, consulting with a mortgage broker, or getting referred to a mortgage lender by a real estate professional. This is one of the most important parts of the entire process. Unless you can buy a house with cash, you must get approved for financing. Two important factors of financing are credit and income. Getting prequalified will determine how much you can afford, how much the bank will lend, and what your interest rate will be. Also, there are several different types of financing options including: Conventional, FHA, VA, along with state and federal programs that offer down payment or closing cost assistance. Not to belabor the point, however, knowing your buying power and credit worthiness is one of the most crucial element to buying your dream home!
The third step of the home buying process is to hire the right real estate professional. Like with any business, there are going to be good ones and not so good ones. The right agent for you is the agent that fits your core values and shares your vision in regards to finding your dream home. What’s important to you may be different from another home buyer, so make sure you interview a couple of agents to determine the best fit. It’s a real estate professionals job to be ethical, forthright, honest and conduct themselves in a professional manner. Sometimes they may advise you in ways you don’t like, or make suggestions that you don’t agree with, which is why having an agent that shares your vision is so important. It’s a lot easier to hear bad news, or take unfavorable advice from someone you know has your best interest at heart.
Once you’ve found and hired a dynamic real estate professional, the fourth step in the home buying process is finding your dream home! In my experience, this can be the fun part, or the difficult part depending on the situation. One of things potential home buyers learn is, it’s hard to get everything they want in a home, even if the home is new construction. A good agent will have vetted you, and determined what your most important needs are, followed by your wants and/or wow factor items desired. Some of the most common amenities that home buyers look for are: location, schools, number of bedrooms and bathrooms, upgraded kitchens, backyard space, pools, and so on. Depending on the situation, some people find their dream home after the first home. Some also look at tens and even hundreds of homes before finding “the one”. On average, a good real estate professional will help their clients find their dream home after viewing about 5-10 homes. The key is gathering as much information as possible at the consultation prior to taking their clients out to see homes.
The fifth step of the home buying process is place an offer in on a home. There are a few factors that go into this process. Once you’ve fallen in love with a home, the real estate professional will write up a purchase contract, pull up comps (comparable houses that sold in the area) and consult you on a price to shoot for. Depending on the area, and how long a home has been on the market, will determine the offer. Homes that are newer to the market tend to go for more, sometimes full price or above. Homes that have been on the market for a while may have more for negotiation, to get a more favorable price. This is where the skill of a quality real estate professional comes in. A good agent will help their clients make a wise decision.
The sixth step and final step of the home buying process is entering into escrow. Once an offer has been accepted, the home buyers will put an earnest money deposit (typically 1% of the negotiated purchase price) down in the form of a check or money order. The agent will then get that check over to the title company, who will facilitate the deal, and open escrow. Once escrow is opened, the process of due diligence begins. This process includes: having an inspection done (required within 10 days of escrow) an appraisal, underwriting, final walk-through and close of escrow. Once all the conditions have been satisfied and you’re clear to close, it’s time to get excited! The escrow company will set up a time for you to come in, sign your closing documents, and bring any additional monies due at closing, which typically, are closing costs. Once the documents are signed, they will get sent to the county recorder. Once recorded and funded, congratulations, you’re a HOME OWNER!!!
As you can see, home ownership is an exciting and detailed process. There will be ups and downs, highs and lows, but the goal is to make it to the finish line. Remember, having a plan will make the process much easier, and consulting with a real estate professional is imperative. Good luck and happy house hunting!