Buying a house is such an exciting time in your life, but it can be stressful not knowing what to expect if you’ve never done it before. There are lots of steps to buying a house, and in this article we’ll cover what the home buying process looks like.
Like any big project, buying a house involves a lot of research. You’ll have more personal research to do like pulling your credit report and credit score. You’ll also want to determine what priorities you’re looking for in your future home. What town, city, or neighborhood do you want to live in? What specific needs apply to your situation, such as school districts, certain job availability, etc.?
Next you’ll want to look into different home-buying programs such as FHA (for first time home buyers), VA (for veterans), or USDA (for rural properties) loans, and compare them to conventional home loans. What programs, if any, do you qualify for? This can help when it comes to choosing a bank or mortgage lending company and knowing what kind of down payment you’ll need.
A great place to start when deciding where you want to finance your home purchase is the bank you already do your banking at. Visit with a loan officer to see what your options are, and how to get started. Your Realtor may also be able to provide some recommended lenders that they’ve worked with in the past.
Finally, when it comes to research, you’ll want to look at homes that have sold in your desired area recently and see what prices currently are. Knowing a general idea of what you can expect to spend will help set appropriate expectations for your upcoming house hunt.
Getting Pre-Approved With a Lender
After you’ve done some research, the next step in the home buying process is to get pre-approved by your lender.
First, let’s discuss what it means to be pre-approved versus pre-qualified. Pre-qualification is more general, and you don’t have to provide your social security or tax ID number. You simply provide some basic information such as your salary and current debt obligations, and your lender will provide an amount you would be approved for based on that information. Investopedia summarizes it as an estimate for credit.
Pre-approval, on the other hand, goes a step further. Your lender will pull your credit report and start verifying information such as your income, then provide you with a letter to show sellers and their agents that you’re pre-approved for a mortgage loan up to a certain amount.
Getting pre-approved for a mortgage is a very important step in the home buying process so that you know exactly how much house your lender says you can afford. Many real estate agents will want to see your pre-approval before they’ll even move forward in the offer and negotiations process. It’s a great tool to show just how serious you are about purchasing a home.
Finding and Working With a Real Estate Agent
Working with a good real estate agent makes all the difference in your home buying journey. Your Realtor will help narrow down your search of available homes to look at, help you come up with a good offer (and all the paperwork that comes with it), and walk you through the entire process all the way down to closing day.
Finding a great real estate agent doesn’t have to be hard, either. An easy way to start is by simply asking your friends and family for referrals. Do you know somebody who recently bought or sold a home? Ask them what Realtor they worked with. You can also reach out to local community groups online to find even more options to choose from.
Another way to search for a real estate agent is to use an online database. Once you’ve narrowed your search to a few great candidates, schedule a phone or in person interview to decide who you’d feel most comfortable working with.
Viewing Homes and Making Offers
Now that you’ve done your research, gotten pre-approved with your lender, and found the perfect real estate agent for you, it’s time for the fun part — looking at homes!
At this point, you and your Realtor will work together to find homes for sale with your top priorities in mind. Some buyers prefer to let their Realtor do all the hunting, while some like to get involved and search for home ads themselves too. Either way is fine! I would suggest letting your Realtor take the lead though. Another great perk of working with a real estate agent is all the connections they know — they might hear of the perfect home for you before it even comes on the market.
Once you’ve viewed a few homes and decided on your favorite, it’s time to place an offer. This will involve deciding on what price you want to offer to purchase the home. Your Realtor will help you analyze the market and settle on a solid offer to make. They’ll draw up the paperwork and get it all turned, then comes the waiting period. The seller of the house may have multiple offers to consider, but you should know an answer fairly quickly.
Want some reassurance you’ve found the perfect house? Check out 11 Ways to Know You’ve Found the Right Home When House Hunting here.
Getting a Home Inspection and Appraisal
Once you’ve placed an offer and it’s been accepted, it’s time to celebrate! While there’s still quite a bit left to do in the home buying process, getting an accepted offer is always an exciting step.
Next up is getting the home inspected and appraised. These are both necessary for your lender, and very important for you as well as the potential future owner of the home.
An inspection will reveal any problems the home may have. The home inspector will look at all the major systems (HVAC, electrical, etc.) and structure of the home to make sure there are no problems lurking. A lot of the time you can use the results of the inspection to re-negotiate your offer. You can ask the sellers to fix any or all of the problems that come up in the inspection, or you can take the amount it will cost to fix them off of your offer price. Sometimes any repairs that are needed are minor, and you may not want to adjust your offer at all. Your Realtor will help with this.
You’ll also be getting an appraisal done on the property. An appraisal will determine the current value of the home, and it’s what your lender will look at to make sure the home qualifies for the loan amount you’ve been approved for. It’s also a great tool for you to have to verify the value you’re getting on your home.
The Final Walkthrough
One of the last steps in the home buying process is doing the final walkthrough. This usually happens within the 24 hours before your closing date. You’ll walk through the home with your Realtor and make sure any requested repairs have been done and that the house is clean and ready for you to move in.
That leads to one final step — closing on your home!
Finally, the day you’ve been waiting for is here — closing day. Closing usually happens at a title company, where you’ll sign a lot of paperwork and ultimately be handed the keys to your new home. Sometimes you’ll close at the same time as the sellers, and sometimes they’ll have already signed their part before you even get there. Your Realtor will usually be there with you to answer any last questions you may have and to celebrate with you. Now it’s time to move in!
What to Expect When Buying a House
The home buying process can be a stressful, yet exciting, time in your life. Knowing what to expect when buying a home can help make it a smoother process. Starting by researching all your options, getting pre-approved with a lender, and picking out a great real estate agent that sets you up for success. From viewing homes and putting in an offer, all the way down to closing day, your Realtor will be by your side to make it the best home buying experience for you.
Looking to buy a home in the greater Sacramento area? Let our team of real estate professionals help! Click here to contact our team here at Quantum California. We’d love to help answer any questions and get you on the way to your dream home!