Deciding to buy your first home (or your next home) is an exciting time. However, with excitement can also come nervousness. There are a lot of steps to buying a home and sometimes it can turn people off altogether.
The idea of walking through properties, house hunting online, navigating home inspections, and still wondering “what if I get a home that has issues” are all genuine concerns.
It doesn’t help that there are some tech companies that try to make purchasing a home a bit TOO simple. Buying a home is still a big deal! This could be one of the biggest financial decisions of your life. If you take it lightly, it can overtake your bank account and your financial future.
If you want to make sure you’re setting up your family’s financial future for success, here are 16 simple steps you can use to navigate the home buying process and purchase the home of your dreams.
Before you buy a house, you need to perform research. It’s important to know about your local market. You should have no more than three top REALTORS® to interview and dive deep into your financials.
You should know whether you’re looking for a home for the long term or the short term. The short term can be five years, while living in a house long-term can be your forever home.
While you perform some of this research, an agent will be able to help you with this. However, you’ll still want to find out some of this vital information on your own.
Determine your long and short term financial goals
One of the biggest mistakes you can make when buying a home is not determining your long-term and short-term financial goals. While your home is a place you love and settle in peacefully, it can also be an expense you loathe if you don’t take the time to consider your financials.
Think about where you want to be in the next year, next five years, next ten years, and even twenty years from now. Do you still need to save for retirement? Then making sure you’re not placing a ton of your take-home pay towards a mortgage should be a consideration.
Take some time to sit down with your significant other or a close friend that you trust and is great with money. Talk through your financial goals and create a plan.
Check your credit
It’s important that you check your credit ahead of time. You don’t want to waste your time viewing a property you’re unable to afford. You can pull your credit for free on websites like Credit Karma, and it won’t be a hard pull on your credit. You’ll just want to perform a soft pull so that you can see where you stand and if you need to make any adjustments to your credit before diving in to purchase a home
Find a top REALTOR®
I suggest interviewing no more than three REALTORS® you think would be the best fit for the job. You want a REALTOR®that’s an expert in the market and has your best interest at heart.
Have a list of questions to ask your REALTOR®. Three questions to ask are:
- Do you make a full-time living as a REALTOR®?
- How long have you been in the business as a full-time REALTOR®?
- Do you have references from past clients I could speak to?
A highly successful REALTOR® won’t have any problem answering these questions for you.
And if you’re searching in or around the Placer County area, feel free to reach out to us here at Quantum.
Learn about different loan products
The loan products you’ll qualify for will depend upon your financial scenario.
For example, if you have some room to improve your credit, you may qualify for an FHA loan.
FHA loans are geared towards individuals who may have less than stellar credit, but are still looking to buy a home. Perhaps an FHA 203K loan might be the best fit for you if you’re looking to put in a little bit of work toward fixing a home that you love. There are even some loan products geared toward borrowers with student loan debt. Either way, make sure to talk to your REALTOR® as well as the mortgage broker about the current loan products available.
Before you go out searching for a property you’re gonna want to make sure to get pre-approved. When you’re putting in an offer on a home, showing the seller that you’re pre-approved for a mortgage makes you look like a serious buyer. That way you’ll know exactly what you qualify for ahead of time and how much you can spend on your next home.
Learn about the state of your local market
Whether you’re in a buyer or seller’s market is important when looking for a home. Right now at the time of this blog post, we are in more of a seller’s market, but that doesn’t mean it’s going to be that way forever. The pendulum swings both ways.
The type of contingencies you place on your offer depend on what type of market you’re in. If you’re not entirely sure, make sure you speak with your REALTOR®. They’ll be able to let you know ahead of time how to negotiate competitively.
Start your shopping experience online
You may want to sign up for websites like Zillow or REALTOR.com to take a look at properties. However, it’s important that you have a two-way exchange with your agent. This is where having the conversation with your agent ahead of time about your buying criteria is very important. A REALTOR® can set you up through their MLS exchange so that you can see properties as they’re updated on the MLS in real-time.
Not only that, your REALTOR® will have access to certain information that you’re not going to be able to see through third-party sites like REALTOR.com. So if it happens to be that a particular property isn’t having showings until a particular date, and you’re interested in the property, your REALTOR® will be the first to know.
Find your potential home
As you start the home shopping experience make sure to keep your goals in mind. It’s easy to see the perfect home of your dreams and get carried away. Remember that your financial goals are as important as your family goals and your long-term goals.
Don’t forget – it is important to be flexible throughout the home shopping experience too. Sometimes what you agreed upon a few steps back may change a little as certain things come into focus. For example, maybe you decided that you wanted a 4-bedroom and 3-bath property for your growing family, yet it’s possible to love a property that doesn’t fit those criteria. Throughout the process, just keep in mind that the layout of the home may not be the only thing that changes your mind, it could be the financial scenario as well. Just be sure to remain open to new possibilities.
Put in an offer
Once you’ve found the home you love, now it’s time to put in an offer. This is where you’re going to really rely on your agent to negotiate on your behalf. Depending on how fast the market’s moving, you might not want to take your time and really sit on the idea of putting in an offer. You might need to decide quickly.
Discuss with your agent what you are willing and unwilling to negotiate on ahead of time to ensure there are no surprises. After you’ve successfully negotiated an accepted offer, it’s time to go into inspections.
Complete all inspections
This is the time that you’re going to want a home inspection done on the property you’re choosing to buy. Although you may be wanting to skip the home inspection…don’t! You don’t want to be left with little surprises that you weren’t aware of.
I’ve heard of many people who decided against a home inspection on the property and regretted it later on when they discovered a horrible issue in the home that cost them a lot of money. By opting out of the home inspection, you are putting that responsibility on yourself and it’s not a great idea.
During the home inspection, your REALTOR® will be in attendance and will be able to walk through the home inspection process with you. Once you’re finished with the home inspection, the home inspector will write up a report with pictures indicating what they saw and whether or not they approve of the property condition.
Negotiate any repairs
If you get the home inspection and it turns out that there are some repairs that need to be made, now is the time to negotiate. As long as you’re in the contingency period of your inspection, you should be able to negotiate any repairs you’d like for the seller to make.
Whether you choose to negotiate also goes back to if it’s a buyers or sellers market.
There’s always the potential of trying to go back, negotiate, and kill the deal. Yet, there’s also the likelihood that negotiating can get you money off the price of the property.
Make sure you discuss what you might be able to negotiate with your REALTOR® after the home inspection.
Wrap up the mortgage financing
At this point, you’re going to finalize your mortgage. This is going to work in tandem with the inspection contingency period. During this time, you may opt to get an appraisal or you’ll also apply for your mortgage in tandem with the bank appraisal.
The bank appraisal is when the bank assesses how much the property is actually worth versus how much you’re requesting in the loan . Typically the bank’s not going to loan more money than what the property is worth, which is why an appraisal may be needed.
After all your contingencies are final, you’re now going to do one final walk-through of the property. By doing one final walk-through prior to closing, you’re getting a chance to look for any problem areas you didn’t notice before and also make sure the property is in the same condition as when you put in the offer.
If the property is not in the same condition as when you put in an offer, make sure to discuss the next steps with your REALTOR®. Although this isn’t an ideal scenario for anyone, these kinds of scenarios do happen, and a seasoned REALTOR® will be able to walk you through this step-by-step.
Close on your home
At this time, the escrow company is going to walk you through all of the paperwork including your loan documents, contract, and any other necessary forms. Your REALTOR® will be in attendance with you at escrow as well.
Move-in to your home and enjoy!
You’re all finished and now it’s time to move into your property. Not only were you able to easily walk through the entire home buying process, but you did it with ease by following the steps outlined in this blog. It’s time to celebrate!
Now that you know the steps to buy a home, you’re in an excellent position to purchase the home of your dreams. Make sure to bookmark this post and refer to it often. If you’re in the Placer County area and you would like help navigating the steps, make sure to give us a call.