You may ask yourself, what is the first thing I need to do before purchasing a home or am I ready? Before you begin your process of purchasing your home you should invest in some logistical groundwork, doing so ahead of time will better prepare you for this journey. The easiest way to go through this process is following these seven steps.
- Meet with a Real Estate Professional
- Getting Pre-Approved
- Search for Homes
- Make an Offer
- Offer Acceptance
- Escrow Period
- Closing
1. Meet with a Real Estate Professional
A real estate professional will listen to you and ask all the questions to help guide you along this journey. Those questions may include how soon you want to act, will you be needing financing, are you a first time home buyer, where is your desired location and so much more to better understand your needs and wants. It is important to find a real estate agent that has the competence in knowing the market and property type you desire.
2. Getting Pre-Approved
Being connected with the right lender will help you understand where you need to be financially to reach your goal in purchasing your home. They will clarify the amount you need to save for a down payment, the price you qualify for your home, and what to expect your monthly mortgage payment to be. Knowing what you can afford is critical to a successful home shopping experience and once you are pre-qualified you are able to start shopping with your real estate agent.
3. Search for Homes
The fun part! Your agent will set you on a modified home search that will specifically show you what you wanted in a home. It is a great idea for you to drive to the area you want to live in and get lost.
It is time for you to think of many factors that will impact you once you settle in your future home. Check out the local restaurants, grocery stores, local schools in the district, the flow of traffic and whatever else you find important.
Now that you know the area you want to live in, make sure to re-express the size of the home you want, bedroom count, bathroom count, important features to you and more. The more you can tell your real estate agent, the better your real estate agent can service you.
4 . Make an Offer
You found the perfect home for you and your family that you want to call yours! It’s time to make an offer. Your agent will prepare the offer based on price and terms you choose. An attentive agent will give you a comparable market value of the neighborhood to make sure you are paying a fair price for your home. Doing so will make you have an educated and appealing offer. Once you approve of the offer your real estate agent will send your contract to the listing agent to present to the sellers. Attached along with that contract will be your pre-approval letter because most sellers won't take an offer seriously without that letter or without proof of funds if you plan on purchasing with cash.
5. Offer Acceptance
The offer has been accepted and you are now under contract for your new property. Once your agent receives the executed contract and you are in the option period you will schedule the house for an inspection. This will include a thorough inspection of the house that includes the roof, foundation, plumbing and so on to make sure you won't have any issues in the future. Most properties will have minor cosmetic issues that are easily fixed but when you run across homes with MAJOR problems, it may be best to cut ties and start looking for another home if the seller doesn’t want to cooperate. Your real estate agent will be helping you through the process and guide you to make educated decisions.
6. Escrow Period
The option period has ended and you are now in the escrow period. You and the seller may have renegotiated the contract and now have agreed to a new price and terms. If you are financing, your lender will order the appraisal to make sure the home meets your loan value. The title company will communicate with your lender, your agent, the sellers agent & all other parties needed to get the property closer to ownership transfer. The title company will do a “title search” to make sure the property transfers to the new owner with zero debts, liens and a clean title.
7. Closing
Congratulations! You’ve made it through 99% of the home buying process! Now it’s time to sign the final documents that will be needed by your lender and title company. Here is how your closing day will go if you have everything you need to close:
- You’ll pay any remaining closing costs, as listed in your Closing Disclosure.
- The seller will sign documents to transfer property ownership to you.
- You will sign a: Settlement statement that lists all costs related to the home sale.
- Mortgage note stating your promise to repay the loan.
- Mortgage or deed of trust securing the mortgage note.
- After that, the title company will register the new deed in your name. It sounds simple, but be prepared for a ton of paperwork!
Once all documents are signed by all parties, the title company will declare that we have “closed and funded”. The transfer of ownership is now complete and you have now become a new homeowner!
