Where to start and where to go when buying a home.

Buying a home can be complex and is uncharted territory for many. To protect yourself (and reduce stress!), it is important to have a baseline knowledge of how the process works. Here is a little overview of the process so that you can feel a little more comfortable in the home buying process.

Calculate how much you can afford

It is not about maxing out your pre-approval letter! Too many homebuyers make the mistake of buying the most expensive house for which they can get a loan. The rule of thumb is to have your monthly payment (principal, interest, taxes, insurance) at 30% or less of your monthly income. Just because you love it, does NOT mean you should buy a house that costs you 40-50% of your monthly income.

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Pre approval

No good real estate agent will allow their seller to accept an offer from a buyer without a pre-approval letter. Submitting an offer without a pre-approval letter is like applying for a job without a resume; nobody will take you seriously. Get a referral for good mortgage broker to get started.

Finding the home

Most homes are found online via the MLS or even Zillow. Your Realtor can schedule showings and will gather all the miscellaneous information on each house you want to see. As a buyer, it is important to be quick once you find a home in which you are interested. That being said, if you find a nice house that just hit the market on Monday, do not request to see it on Saturday. Do not make a rash decision, but keep in mind that there are other buyers out there with whom you are competing.

Inspection

Once you are under contract to buy a home, there is typically an inspection period of around one week. During the inspection period, you can back out of the contract and get your earnest money deposit back. Afterwards is another story. This will be your opportunity to do all your due diligence before deciding to move forward 100%. You should hire a licensed home inspector and get any questions answered that you may have pertaining to things such as HOA fees, regulations, CDD, insurance, flood zone, well/septic, etc.

Appraisal

When getting a mortgage, your lender will require an appraisal to ensure they are not lending too much money against the house. This is usually done about 2 weeks into the contract. If the house appraises for the contracted price or more, then no problem. If the house appraises for less than it is under contract for, you will need to pay more money down. If this is not possible, the seller will have to agree to drop the price of the house. Otherwise, the deal will fall through.

Closing

A typical closing time frame is around 45 days and ranges depending on your type of mortgage (conventional, FHA, VA, USDA). During this time, you will need to be on top of submitting your information to the lender such as bank statements, employment documentation, credit information, and so on. The title company and lender will guide you as to what is needed from you.

The most important part of the home buying process is… calling us! When you are ready to buy a home, work with an agent who is committed to making sure your home buying experience is a success. Call us today or fill out the form here to get in touch.