Buy your dream house with confidence

So, you want to buy a house—now what? The first time buying a home is an emotional, exciting, and sometimes exhausting experience. You may also be wondering along the way—what am I missing? This is a common question. Here’s how the buying process works from start to finish.

• Do some preliminary online searching. Check into what homes are selling for in the areas you’re interested in to give you an idea of what you’re looking for. This will help later on when communicating your wish list with your real estate agent.
• Take care of the budget. Use an online mortgage calculator to determine what your monthly mortgage payment would be if you were to purchase one of these homes you’ve found online. Make some additional estimates for utilities and see what your budget can cover.
• Get pre-approved with a trusted local lender. To get pre-approved for a mortgage you’ll need to get some paperwork in order: pay stubs, W-2s, bank account statements, tax returns for the past two years, and credit lines, and names and addresses of your landlords for the past two years. Oftentimes it seems as though your current bank is the one you should work with; sort of a one-stop shop convenience.  Not all banks or credit unions are very competitive in a competitive housing market though, so get to know their reputation in that regard.  A pre-approval letter from a trusted lender with a reputation for strong communication, solid underwriting and ability to close quickly can bolster an offer to top spot, when all else is similar, providing a competitive advantage.  Please also realize that the amount your lender approves you for as a maximum is by no means what you should spend; your overall monthly payment and household expenses have to fit your budget.
• Find an agent. A good real estate agent will help you navigate the process every step of the way.  Scope out reviews and hold interviews.  A great agent will be happy to meet, answer questions, provide references, and buy your coffee.
• Look at homes. Be patient at this stage. Your real estate agent may show you a variety of homes to get your reaction on features they think you’ll like. Give your agent detailed feedback so they can show you homes that are perfectly suited to you. Sometimes, this process can take months or years—So be patient. Also, make sure you let friends and family know you’re looking for a new home--you may even find out about an amazing home before it hits the market.
• Make an offer. Once you’ve found your dream home, you may want to move quickly. Your agent will guide you on a reasonable first offer to start negotiations based on market conditions. Also, make sure you consider closing costs which could account for 2-5% of the home price.
• Negotiate. Prepare to go back and forth with the seller a few times on price and selling conditions. Your real estate agent will be your advocate here and try to get you, their client as much as possible for your money while being fair and respectful to the seller and their real estate agent.
• An accepted offer. Pop the champagne! If you reach an agreement, you’ll make a deposit to an escrow account to show good-faith. Escrow is usually 30 days where the seller takes the house off the market with the contractual expectation that you’ll purchase the house - provided you don’t find any serious problems during the inspection.
• Deposit Earnest Money.  Once an offer is accepted there are 72 hours to deposit earnest money funds with the brokerage or title co (your Realtor will instruct on this).  Earnest money shows the seller that you are serious about the purchase and putting money where your signature is right off.  That money will be held until closing and will be applied to buyer's closing costs.  If the deal does not make it to closing because of an issue with inspections or appraisal, it can be refunded to buyer.  If the deal goes bust because buyer backs out last minute through no fault of the Seller, Seller may keep the money for time/opportunity lost on securing a deal that will perform to completion.
  
• Do a home inspection. Even if the home appears to be flawless, there’s no substitute for having a professional inspector review the property for quality, safety, and general condition of your potential home. You don’t want to be surprised with a home that needs a lot of unexpected repairs. If the inspection reveals undisclosed serious defects, you can negotiate further to have the seller make repairs or discount the selling price. You’ll also likely have the option to withdraw your offer and get your earnest deposit money back.  Unless otherwise specified in the contract, there is typically a 10-day window from offer acceptance for inspections to be handled.
• Appraisal.   Once you are past the inspection period and the contract is moving forward, your lender will order an appraisal.  This will all be coordinated between the lender and agents, however you will pick up the tab for the appraisal cost either at the time of appraisal or at closing.  Once the appraiser has performed their task and generated a detailed report, depending on value assigned to the home the sale may sail through to closing, may require further negotiation, or may no longer be viable.  There is a 3-day window from receipt of the report to negotiate or withdrawal if necessary.
  
• Closing. When your negotiations with the seller are successful, and the appraisal is good, underwriting should be able to get the clear-to- close soon after.  Once the title co. has the clear-to-close, agents will coordinate closing dates/times that work for all.   At your closing, you’ll spend an hour signing paperwork.  If you have immediate possession, then you will be handed the keys too.