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The process of buying a home in 10 steps

Tanya Vincent April 3, 2023

The process of buying a home in 10 steps

First off, we’d like to congratulate you. You’re considering buying your first home – what a milestone! Perhaps you’re ready to take your family to the next step. Or maybe you’re tired of renting and would like to start generating wealth. Whatever your reason, such a decision can be fraught with uncertainty, excitement, and lots of questions. Here are the 10 key steps to homeownership to help you prepare and start your home search with confidence. 

 

1. Do some basic research

Reading this blog is a great first step! With your dream home on your mind, it helps to first get a lay of the land and all your ducks in a row. Whatever your preferred idiom, gaining a general understanding of the requirements for buying a home, as well as your own requirements, will help you move through the rest of these steps with more ease.

Create a basic outline (in your head or on paper) of what the home buying process will entail, what documents you may need to collect, and your guiding principles in buying a home. Why do you need to buy a home now? What is your budget range? What is your ideal location and are you flexible about it? How much space will you need? This will also help you brainstorm a list of questions you still need answered and that you can pose to your future realtor. Additionally, it’s important to have an open and honest discussion with your co-buyer if you have one, so you can avoid any unexpected miscommunication as you start looking for homes.

2. Do a financial pulse check

This is important for two reasons. Firstly, being financially aware will better prepare you to actually own your home. As a homeowner you’re responsible for much more than you may have been used to as a renter, for example, and having that financial preparedness will save you a great deal of stress in the long run. Secondly, unwanted financial surprises might prevent you from moving forward with a home you really love as the home search ramps up.

Make sure your credit score is up to par (620 is usually the minimum), save up for a down payment, and be realistic about the type of home you can afford. There are also other home purchase costs that first time homebuyers forget to take into account, like the mortgage application fee, appraisal fee, title insurance, home inspection, homeowners insurance, and property taxes. Recognizing that you may need more time to take care of these things is also a normal and crucial part of the process that will set you up for success.

3. Get pre-approved for a mortgage loan

Once you feel fairly confident with your finances, getting pre-approved is the way to get the proverbial foot in the door. Things can start to move quickly once you’re home shopping and you want to be sure your lender is ready to back you if you initiate an offer. Typically this is the first thing your realtor will recommend you do anyway, and they can also recommend a lender they trust or have worked with before.

4. Find a real estate agent

Real estate agents are like therapists – you can’t do without them but they need to be a good fit. It’s okay to change your real estate agent if you don’t feel well represented. Ultimately, both you and your realtor benefit from closing on your dream home, so they are normally eager to nail down all of your requirements. That being said, it’s wise to be upfront about your expectations as well as open minded to your realtor’s expertise, so they can guide your home search appropriately.

5. Browse homes and set alerts

In our hyperdigital world, there is no shortage of home-browsing apps and websites to choose from. Don’t forget to set alerts for your top criteria – getting notified and acting quickly may be the difference between securing the perfect home and someone beating you to it. There’s also something to be said for cruising your desired neighborhoods and keeping an eye out for home sale signs. There could be ones you missed online and you get the added bonus of a first, in-person impression of the home (or even a well-timed open house event).

6. See homes in person and ask those questions you prepared

Yup, sometimes homes can catfish you too… Often the photos are gorgeous but when you get there, the lighting is not what you imagined or the wall colors aren’t quite right. Seeing a home in person allows you to see it from different angles, identify things that might not check your boxes, and just get a general feel for the home (otherwise known as a #vibecheck). It may even be possible to set up time with the seller to pose your questions directly to the current homeowner – just check with your realtor first.

7. Make an offer

This is where most first time homebuyers start to fidget. What is that just-right Goldilocks offer that will represent your best interests while not offending or scaring off the seller? By now your realtor should be fairly familiar with what you’re comfortable offering financially, but it’s crucial to also discuss any other contingencies and non-financial add-ons (like appliances for example). Don’t be afraid to go through the offer line by line before signing and be clear on the terms in case the offer gets accepted. Once it is accepted, you’ll sign a purchase agreement and provide an earnest money deposit – this establishes your serious intent to buy the home and puts you “under contract” for the next 30-60 days, roughly.

8. Do your due diligence with inspections and repairs

Ensure a thorough home inspection (by your realtor’s recommendation or of your own choice) to assess what is or isn’t up to par with the house. Home inspectors establish if the home is in good standing order by evaluating the structural foundation, electrical wiring, plumbing, roofing, etc. Depending on the issues or damage found, you can negotiate needed repairs into the home contract. Be wary that some home inspectors can be more or less thorough than others, so don’t be afraid to meticulously review the inspection documents and ask questions about areas that seem questionable. Something missed during a home inspection just means you’ll need to deal with it as the future homeowner. If the home inspection turns up something that causes you to reconsider the home entirely, you can still back out of the contract (assuming that you had the proper contingencies written in, otherwise you may lose your earnest money deposit).

9. Sit tight while your loan is processed

Now is the time to let the underwriting experts do what they do best. But stay on alert – have any additional paperwork ready, don’t open new lines of credit, and generally don’t make waves so your lender doesn’t have to process anything anew.

10. Close on your new home!

You’re almost at the finish line. But first you’ll need to complete a last walk-through of the home and ensure all the contingencies have been met. Once you, your realtor, and the closing agent are given the green light from underwriting, you’ll sign a closing disclosure and wire your down payment. Be prepared for a fairly lengthy mortgage document signing – there is usually a lot of paperwork involved – but, again, don’t be afraid to ask questions during the process. Finally, the keys will be handed to you and you can pop the champagne (or apple cider) to celebrate your new home! You did it!

 

We hope these 10 steps help you grasp the homebuying process and feel a bit more confident about kicking off your house hunt. As scary as it may seem, this is also an exciting time and a good opportunity to be really prescriptive about what you envision for your dream home. We invite you to lean on our team at Sapphire Realty if you’re ready to take the plunge or have questions about buying your first home. Happy hunting!

Bonus list: Documents you’ll likely need to secure a home loan

  • Photo ID
  • Recent tax returns
  • W-2 forms
  • Employment status letter
  • Self-employment documents (business tax returns and profit / loss records)
  • Bank statements
  • Retirement and brokerage account statements
  • Statements for any other loans you have open (student loan, car loan, etc.)
  • Credit card statements
  • Any asset titles (for example for a vehicle)
  • A list of past addresses where you’ve lived
  • Proof of any additional income aside from your annual income (alimony, Social Security, bonuses, etc.)
  • A gift letter, if you plan to have someone like a family member help you with the down payment or other home closing costs

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