Whether you are a newbie to the home buying process or a veteran—or somewhere in between—the thought of mortgages, house hunting, inspections and offers may seem intimidating and overwhelming. Knowing what to expect will put you at ease. My step-by-step home buyer’s guide will not only help you navigate the process with less stress and overwhelm, it will best position you for a successful purchase from the start. Just follow these 12 steps and you will be on your way:
STEP 1 – Check Your Credit Score
The FICO score is the most popular and 90% of lenders use this score rather than others to determine creditworthiness. Carefully review your credit history and correct any errors or blemishes to strengthen your score.
STEP 2 – Gather Your Documentation
- Employment/income verification – This includes the last two years of tax returns, W-2s, 1099s, and your most recent pay stubs.
- Financial statements – This will include bank and brokerage account statements, retirement statements and proof of income to close.
Keep in mind that your lender may require other documents, but this is a good place to start.
STEP 3 – Get a Pre-Approval NOT a Pre-Qualification
A pre-approval is a commitment to lend you money and positions you to potential sellers as a serious buyer. A pre-qualification is unverified information you provide and will not carry as much weight. It may also put you at a disadvantage in a multiple bid situation.
To obtain a pre-approval, a lender will check your credit score, verify your income and employment status, and may require other documentation.
I can provide recommendations of experienced and knowledgeable lenders who will guide and help you with a mortgage best suited for your needs.
STEP 4 – Schedule a Buyer’s Consult to Assess Your Needs
Before house hunting, it is important for me to know what is on your wish list and your timeline for making a move. Think of your requirements in three columns – needs, wants and wishes. Needs are features that are must-haves. Wants are amenities that may not be must-haves but are key factors in your decision-making process. Your wish column will help you define the gap between the home of your dreams and the home you can afford. I will help guide you through the process of identifying your needs, wants and desires as they relate to the home you intend to purchase and explaining the current market conditions. Here are the core categories you will need to think about when preparing for your home search:
- Home Size
- Type/Style of Home
- Home Features Exterior
- Home Features Interior
- Home Systems & Amenities
I will set you up for auto email alerts based on your criteria and price range. Bring your pre-approval to the meeting as this will help me understand your price objectives and limitations.
STEP 5 – House Hunting – Now the Fun Begins!
Based on the information we discussed in the assessment meeting and your budget, we will work together to identify homes to preview. I will set you up to receive auto alerts from the MLS, which offers the most accurate and up-to-date information. These auto alerts can be changed and modified at any point, so don’t hesitate to let me know of any changes you would like to make during the search process.
STEP 6 – You Are Ready to Make an Offer!
Once you have found a home that meets your needs, it is time to make an offer! I will guide you through the process and procedures for making an offer. First, I will provide you with recently sold comparable properties in the area. We will discuss these properties and how they compare to the subject property. I will guide and help you with determining an offer amount. In addition to your offer price, the other important terms (i.e., deposit amounts, mortgage type and term, closing date and any contingencies) will need to be determined before submitting your offer. In some cases, an initial deposit of $1000 – $5000 may be necessary, depending on the situation. Your pre-approval will be part of the offer. Once the offer is signed by you, it will be presented to the listing agent. The listing agent will then present the offer to the sellers.
STEP 7 – The Negotiation Process – What to Expect
If the seller accepts your offer without any negotiations – Congratulations! We move on to the next step. However, in most cases, there are some negotiations. Your offer price is most important to a seller; however, the other terms of the contract can be negotiated as well. The negotiation process can take time, so you will need to stay calm and be patient during the process.
After an agreement is reached by both parties, the seller will sign the contract. The contract will then be forwarded to the attorneys representing both the buyers and sellers. The buyer’s attorney will acknowledge receipt of the contract by notifying the seller’s attorney and the process of Attorney Review will begin. During Attorney Review, both attorneys will refine the terms of the contract until they reach an agreement. Once the terms are agreed upon, the process of Attorney Review will be concluded. You are now Under Contract!
STEP 8 – Hiring a Qualified and Certified Home Inspector
This is an important step in the next phase of the process, and I am happy to provide recommendations should you need them. The home inspection should include a radon test and a wood destroying insect (WDI) inspection. Depending on the home you are purchasing, other inspections may be necessary. I recommend that you speak with a few home inspectors for pricing, availability, type of report provided, turnaround time, and what is included (or not included).
STEP 9 – Second Deposit
This deposit is usually due 5-10 days after Attorney Review is completed and represents 5-10% of the total amount planned as your down payment.
STEP 10 – Work Closely with Your Mortgage Lender
It is important that you stay in close contact with your mortgage lender to ensure you meet all the conditions required to obtain your mortgage and meet the deadlines of the contract.
STEP 11 – Prepare for Closing
One week before the scheduled closing date, you will need to notify the utility companies to transfer service into your name. A list of service providers will be provided to you. Contact your attorney for the exact amount of money you will need to bring to closing. This payment must be made in certified funds only. Personal checks will not be accepted.
STEP 12 – Day of Closing
A final walkthrough inspection will be done the day of closing to ensure any agreed-upon repairs as a result of the home inspection have been made. The home should be completely cleaned out of the seller’s belongings except for anything you agreed to keep. The house should be left in broom-swept condition. The closing typically takes place at the buyer’s attorney’s office.