15 STEPS TO BUY A NEW HOME
Make sure you're ready. Be sure you are emotionally ready. You’re making a big financial commitment and putting down some roots.
Get your finances in order. Buying a house may be the biggest financial decision you'll ever make, so before you take the plunge you want to be sure your finances are solid. Put a budget together to see how much you can really afford. And, check your credit score, too. A higher credit score is the single most powerful way to earn a lower mortgage interest rate.
Plan for the down payment. When you've determined what you can afford, you can figure out how much you want to save for a down payment. Though 20% down payments used to be the norm, many homeowners opt to put down less. A smaller down payment requires less money upfront, but means you'll have to pay mortgage insurance. The type of home loan you use also impacts the minimum down payment required. There are numerous options out there for financing. Do your research or talk with your realtor for tips.
Create a wish list. Type of home, location, move-in ready or fixer upper? What is most important to you for a home?
Get preapproved for a mortgage. Shop for a mortgage lender. There are lots of lenders out there, including big brick-and-mortar banks with familiar names, online-only nonbank lenders and smaller, local banks and credit unions that may offer more personalized service.
Start The Home Search Process. Once you’ve met with your real estate agent to discuss what you’re looking for, it’s time to begin house hunting. As you browse, keep your priorities in mind. Remember it’s highly unlikely any listing will perfectly match your dream home, so try not to be too picky until you see the houses in person.
Tour Different Areas And Houses. You’ll find that the more houses you see, the more they all start to blend together, so be organized and make sure you walk through the various things you like and dislike about each property with your real estate agent. When visiting a listing, take notes and reflect on the house itself as well as the surrounding area.
Make An Offer. When you find a house you want to buy, it’s time to begin the process of making an offer. Your real estate agent can run a comparative market analysis to determine a fair price based on recent sales of similar homes in the area. Your agent can also help you be competitive by suggesting contingencies to include in the offer.
Get A Home Inspection and Home Appraisal. The home inspection is important, as it will identify areas where major repairs or renovations require immediate attention as well as any work that needs to be completed in the future. If significant repairs are needed, you can request that the seller complete them before closing. If the seller declines to handle the repairs and an agreement can’t be reached, you may be able to withdraw your offer. At this point in the process, your lender will require the home to be appraised before they agree to release any funds. A home appraisal provides an estimate of how much a home is actually worth based on comparable sales in the area, market trends, public records and a comprehensive inspection of the property. Keep in mind the lender will only provide funds to cover the appraised value of the house, so if the appraisal comes in below the purchasing price, you’ll have to either negotiate the price or come up with the difference, which is one of the many reasons having a mortgage contingency is in your best interest.
Purchase Homeowners Insurance. Also in your best interest is homeowners insurance, which works as a safety net to protect your home and finances. Although homeowners insurance isn’t legally mandated, most lenders will require you to have an insurance policy on the home before giving you a loan.
Do A Final Walkthrough. At this point in the home buying process, you’re probably eager to be done – but don’t neglect the final walkthrough. One last walkthrough of the property can help the buyer if something needs to be fixed by the seller before purchasing the home. Final walkthroughs typically take place a day or two before closing after the seller has moved out, allowing you to ensure all agreed upon repairs have been completed.
Close On Your New Home. Congratulations! You’ve made it to the final step of the process. When the time comes, make sure you review your Closing Disclosure, which will outline the terms, final closing costs and any outstanding charges or fees included in your loan. Your lender will send the disclosure to you at least 3 days before closing. During closing, the property title will pass from the seller to you. A closing agent will oversee this process, which typically takes place at a title company, management firm, escrow office or your home.
Sign legal documents. This includes the Closing Disclosure, promissory note, deed of trust and certificate of occupancy.
Pay closing costs. This may include fees for your mortgage application, appraisal, survey and title search as well as paying your down payment.
Move into your new home!