Your Home Buying Guide Step By Step
This 14 Steps To Home Buying guide shows step by step, the basic home buying process. Describing all the activities needed to purchase that dream home. Setup a personalized search for properties directly from the Multi-Listing Service.
1. Finding the Right Buyer's Agent
- A buyer's agent will represent only you and have a responsibility to look out for your best interests.
- Buyer agents will ask you to sign a Representation Agreement, but it is the seller who pays the commission.
- Interview agents until you find an agent you trust and feel comfortable with.
2. Start the Mortgage Pre-Approval Process
- Ask your agent for a referral to a mortgage broker and compare rates offered by your own bank and/or credit union.
- Ask the lender to give you a loan pre-approval letter.
- Decide on a maximum loan amount, but only choose a mortgage type that you understand with a payment you're comfortable with. The loan amount can be less than the amount you are approved for.
3. Discuss Your Needs and Wants in a Home
- Narrow your search to those homes that fit your exact parameters to find that perfect home.
- Have your agent look at homes for you before showing them to you to save you time and/or a trip to a home that doesn't fit your needs.
- Ask for additional input from your agent on any online home listings you view and become interested in.
Home Buying Guide - Steps to Success
4. Visit and Preview Your Selected Properties
- Your agent should give you MLS comparable sales in your targeted neighborhoods.
- Attend Open House events with your agent.
- Before attending a property viewing, drive around the neighborhood and get familiar with your surroundings, determine if the community is right for you.
5. Writing and Submitting a Purchase Offer
- Select an offer price based on the amount you feel a seller will accept or counter.
- If you are considering a "low ball offer", ask your agent to justify this price for you.
- If the home is considered desirable or in a prime location, prepare for multiple offers.
- If your offer is rejected, ask your agent to explain why and try not to repeat that mistake with the next offer.
- Making it personal. During negotiations, you can share a little personal information about your family. Give the seller a reason to care about you and your offer.
6. Arrange for a Home Inspection
- Inspections reveal needs for repairs and replacements that can be negotiated after the initial accepted purchase offer.
- A home does not “pass” or “fail” an inspection. The inspector’s job is to make you aware of repairs that are recommended or necessary.
- Sellers often have a home inspection before listing the home for sale to prepare for condition issues. These issues could delay closing or even cause the sale to fall through.
- Buyers have a home inspection to know exactly what they are buying. A seller may be willing to renegotiate a price to accommodate needed repairs. In addition, you may decide the home will take too much work and money and walk away from the purchase deal. (Be sure your initial purchase offer includes an inspection clause stating the purchase is contingent on the findings of a professional home inspector).
- See the home through the eyes of an objective third party.
- You may wish to have separate tests conducted to check for termites, or the presence of radon gas. Talk to your real estate agent for information about these tests.
7. Provide an Earnest Money Check
- Do not ever make your check payable to the seller. An earnest Money Check is typically made out to the assigned title company.
- Your offer should contain contingencies that will return your earnest money deposit. Just in case you cancel the contract with cause.
- If you drop off the EM check to the title company, make sure you ask for a receipt. Hold on to the receipt and bring it with you to closing.
Your 14 Steps to Home Buying Guide
8. Managing the Signed Contract
- Your agent should let your mortgage lender know that you're under contract. This will start the process of getting mortgage approval.
- Your agent will open escrow and title, if the listing agent hasn't already done so. Provide escrow officer's name, phone and escrow file number to your lender and your insurance agent.
- Review and question items not understood on the Seller Disclosure Form and preliminary title policy.
- Complying with lender's requirements, lenders may ask for additional information. Do not make home buying mistakes such as altering your financial situation while in escrow.
- Some basic financial guidelines to ensure problems don’t arise between the pre-approval process and closing. They are as follows:
- Don’t Apply For New Credit – Each time your credit is pulled by a creditor or lender, you can lose points off your credit score. This will include co-signing for a loan.
- Don’t Max Out Credit Cards – Try to keep your credit card balances 30% below their limit during the loan process. If you pay down balances, do it across the board.
- Don’t Consolidate Your Debt – Avoid consolidating your debt onto one or two credit cards. You credit will appear “maxed out” on that card and you will be penalized.
- Don’t Close Credit Card Accounts – If you close a credit card account, it may appear that your debt ratio has gone up. Closing a card will affect other factors in your score, including credit history.
- Don’t Pay Off Collections Or “Charge-Offs” – If you want to pay them off, do it through escrow at closing.
9. Ordering the Property Appraisal
- Your lender may require an advance payment for the appraisal. If you receive a low appraisal, discuss options with your agent.
- Ask for a copy of the appraisal.
10. Schedule the Closing
- While we hope closing occurs on your closing date, there are many factors which could cause it to be pushed back. For one thing, a tight time frame, (anything 30 days or less) could cause the lender to need more time.
- Closing generally takes place at a title company's office. The closing can take 1-4 hours. If signing out of state, title will arrange a notary to complete the signing in your area.
- Closing can not take place until you’ve been completely approved for the loan without any conditions. This generally occurs 2 -7 days prior to your closing date.
11. Arrange for Homeowners Insurance
- Order your homeowner's insurance policy early. Sometimes previous claims by a homeowner can make it difficult to get insurance. Get replacement coverage.
- During the mortgage approval and underwriting process, it is required that Homeowner’s Insurance is set. Shop around and get some quotes since rates can vary. Begin with the company that already insures your car or other property you own. You’ll likely get a discount for already having car insurance through them.
- Have your homeowner’s insurance policy go into effect the day BEFORE you close on your new home.
- Also, be sure to get proper documentation from your new homeowner’s insurance company. Provide your policy to your underwriter; they will require proof of insurance before they approve your loan.
CLICK HERE to download our free First Time Home Buyers Guide
12. Preform a Final Walk-Through of the Home
- Inspect the property to make sure it's in the same condition as when you agreed to buy it.
- If you find a serious issue, address it now before you close.
- Verify and approve any and all repairs are completed per the satisfaction of the contract.
13. Consider Obtaining a Home Warranty
- A home warranty is not the same thing as homeowners insurance. Never use a warranty as a replacement for homeowners insurance.
- Homeowners insurance covers major hazards, like fire, hail damage, property crimes, and some types of water damage. These hazards could affect the entire structure and your personal possessions.
- Policies can differ depending on which company you obtain your home warranty through. Generally, home warranties will cover home appliances and electrical and plumbing systems.
- The cost and terms of a home warranty can vary, compare policies before purchasing. Warranties typically range between $325 – $1000 and usually good for one year from the purchase date.
- Sometimes we can negotiate for the seller to provide a home warranty as part of the contract negotiations.
- If the seller is not providing you with a home warranty and you want to purchase one, there are many reputable companies. Ask your Realtor for some referrals.
14. Close Escrow (Closing Day)
- Sign escrow documents along with your loan documents near closing.
- Bring a valid picture ID.
- Deposit Funds.
- Bring a certified check payable to escrow.
- Expect escrow to pad the amount, so you will receive a refund after closing.
- Consider asking your bank to wire the funds to escrow, saving you the hassle of waiting in line at the bank.
- Your property deed, seller's reconveyance and deed of trust will be sent for recording with the county assessor's office.
- The title company will notify you and your agent when it is recorded and funded.
- After recording and funding, unless your contract specifies otherwise, the property is yours -- change the locks immediately!
We hope this basic outline and home buying guide gives you a little more clarity to the home buying process. What do you do once you've purchased your home?
