As most of you know we recently just purchased our second home. It was a learning process with selling and buying at the same time, and definitely gave us a new perspective on things. I began thinking of first time buyers and how intimidating it can be to purchase a home. I thought I would share the basic steps/things to keep in mind when going through the process,
I would love to know anything that surprised you along the way!
1. Determine A Budget
Decide how much money you want to put down. Understand property taxes and home insurance will be part of your monthly payments (calculate those in). Determine a range and a max house price to estimate the monthly payment.
2.Find A Lender & Realtor
Make sure to find both a lender and realtor, as both will work together in the buying process to create an experience for you (hopefully positive). Ask for recommendations and don’t be afraid to find the best fit for you. Make sure both know your price range and that your lender has a ball park of the loan amount. You will have to submit pre-approval letters from your lender on any offers made through your relator.
3.Have Documents Organized/Ready
You will have to submit quite a few documents to your lender to be approved for your loan. Items include things such as tax returns, pay stubs, bank statements (checking/savings), assets, home contracts, etc. The faster you are, the faster the process is.
Once you find a home, you will make an offer. Most likely the seller will come back with a counter offer and you can go from there on negotiating on a price (or walking away).
5. Contract & Money
After you come to a price agreement and have signed the contract you will generally have a few days to pay your earnest money (goes to title company and in escrow account–usually 1% of sale price) and your option period money (goes to seller). This is to show you are serious about the home purchase. Be prepared to give those checks to your realtor. Prices for each will be listed in the contract.
You will go into an “option period” where you can still make negotiations with the seller. This is based off of the home inspection. It is usually around 7 days to negotiate anything else in the contract. All revisions will be sent and updated through your realtor.
7.Appraisal & Home Insurance
The home will be appraised for tax purposes and you will receive a copy for your records. You will also need to submit to your lender what company you are using for your home insurance and have that ready to go.
Your finances and loan amount have to be approved through the underwriting process.
9.Final Items & Set Up Bills
Once you go through underwriting, your lender may ask for additional items. Be prepared to give those ASAP so you can be receive the final approval. Also start contacting the companies you will be using to get everything set up in your name on the date of purchase (electricity, internet, water, etc).
10. Approval & Closing
Once you are approved the last step is to close (at the title company)! Have your down payment ready. You will receive the keys after finances have gone through and everything is good to go!
This of course can look different for each person and situation. We have been blessed to have had great experiences with both homes. It is such an exciting time and can be stress free if you know what to expect going into it!