Deciding you want to buy a house is a very exciting thing! First time buyers spend hours looking at pictures of beautiful homes online and watching shows on HGTV to get ideas about decorating and all of the fun things they want to do once they are in their new home. However, there aren’t many TV shows about HOW to actually buy your first home. Most people actually put off taking the first steps because they don’t know what to do, they are overwhelmed by the process or they are afraid it might not work out. Our goal is to help make the process simple and fun! Here is a quick overview of the steps required to buy a home.
Step 1: Talk to a lender!
For a lot of people, this is the scary part. Many people are afraid to know what is on their credit report or what the lender may think of them. Put these things out of your mind! Lenders see all kinds of issues every day. They are here to help you. It is NEVER too early to start this process. The sooner you get your credit pulled and understand what is on there, the sooner you can start taking the steps to fix any issues. The lenders that we work with are all very patient and they will help you develop a plan to get your score as high as possible in the shortest amount of time. We have people who can get pre-qualified in 15 minutes and others that we work with for months or even years before they are ready to go.
The lender will need to gather basic information such as your social security number, date of birth and income information. It’s helpful to have your last 2 paystubs and your most recent tax return handy when you make the initial call to your lender.
Once they have reviewed all of your information, they will talk with you about how much you are qualified for, as well as how much you are comfortable spending. You can give them the number you want to spend monthly, and they will work backwards to tell you the price range you should be looking at for your new home. Once you have that information and a pre-qualification letter, the fun part begins!
Step 2: Shopping for a house!
Now we can start shopping! When you first meet with your Realtor, we will discuss what it is exactly, that you’re looking for in a home. We’re going to ask you about location, the size of the house and yard you need and anything else that’s important to you. It’s also important for us to know the type of financing you are using and your time frame for moving. We will take all of this information and set up an auto e-mail so that new listings will come right to your e-mail the day they come on the market!
When you find “The House” we will help you determine what a fair offer price is based on recent sales of similar homes in the same area. We will write the offer paperwork for you and you will write a check for your Earnest Money Deposit (EMD). This check is cashed once your offer is accepted by the seller and both parties have signed the contract. The EMD is held in an escrow account for you and acts as a credit to you at settlement. If for any reason your contract falls apart by no fault of your own (home inspection issues, appraisal issues, etc) your EMD will be refunded to you. If you do something to default (just change your mind, purposefully cause your loan to be denied, etc) the seller has the right to keep your EMD. We’ll help make sure you are protected and know what you should or should not do while under contract!
Step 3: Home inspection time
Once you are under contract, you will schedule your home inspection. The home inspector will come to the house and go over the house top to bottom with you. Their job is to make sure you know as much as possible about the house. They will point out any health or safety concerns as well as help you understand what maintenance you should be doing to help keep your new home in the best shape possible! Once we have the report from the inspector, we will help you decide what things (if any) you would like the seller to repair prior to settling on the home.
Step 4: Appraisal
The bank is going to order an appraisal. The appraiser will visit the house and make sure that the price you are paying is fair. They will also check for health and safety hazards to be sure the house meets the criteria required by your financing. If any problems arise from the appraisal, your Realtor will go back to the seller’s agent and help negotiate any price adjustment or repairs that are needed.
Once the appraisal is done, you are on your way to settlement! At this point, you will be working closely with your lender to make sure they have any updated documentation that they need.
During this entire process, the title company is working behind the scenes to make sure that the property can legally be transferred from the seller to you. They will be preparing all of the paperwork to be signed and will be at settlement to help explain everything to you.
3 days prior to settling on your new home, you will do a final walk through with your Realtor to make sure that any repairs have been completed and that the home is in the condition you expect it to be. As long as everything looks good, you are on your way to settling!
You can plan on settlement taking between 45-60 minutes on average. The amount of time will depend on your financing type and the amount of questions you and the sellers have as you are going through the paperwork. ☺
This is a lot of information condensed into 2 short pages! If you have any questions or would like any information, please reach out to our team of skilled agents today! We love sitting down with first time buyers to review the process and make sure that all of your questions are answered. We wish you the best of luck on your path to home ownership!