The Home Buying Process
Steps to Buying a Home
Step 1: Planning and Financial Considerations
Buying a home doesn't have to be a hassle if you're prepared and you know what to do and when to do it. Choose an experienced & knowledgeable real estate agent-they are the key to helping you have a smooth home buying experience!
Obviously, if you have made it to here you have already begun the planning phase of the Home Buying Process. Do you know your Credit Score? This is the first thing we will need to discuss. Why? Your credit score is a major factor in determining your ability to get approved for a mortgage. The minimum credit score for a Conventional Loan is 620. For a government-backed loan your score can be as low as 580, but that may vary depending on type of loan. I recommend checking your credit score and thoroughly examining your credit report for any errors. Now is the time to dispute any errors, it may help your credit score.
Step 2: How Much Can I Afford?
First, I'm sure you want to know what your Monthly House Payment will be based on the loan amount. Utilize the Mortgage Calculator located on this page to see what your Principal and Interest Payment will be. Keep in mind there will be other costs each month to include taxes and insurance and possibly an HOA. In addition you'll need funds for a down payment, closing costs, fees (such as fees for an attorney, appraisal, inspection, etc.) and the costs of remodeling or furniture. Down Payment percentages can range from 0 to 20% depending on type of loan.
Feeling Overwhelmed? Don't Worry, you're already working with a professional and experienced REALTOR®
Step 3: Finding a Mortgage Lender
Let's find you a Mortgage Lender? Below is a list of several local lenders I work with on a regular basis. For more information just click on the lender's name and you will be taken to their website.
Steve Fair, Branch Manager
American Portfolio Mortgage
Tara Rodgers, Senior Loan Officer
Draper & Kramer Mortgage Corp.
Stephen Oden, Mortgage Loan Officer
Origin Bank Home Lending
Sherri Roach, Loan Officer
Fairway Independent Mortgage
I always suggest shopping around for a lender since they each may offer a different type of program which may be better suited for your specific needs. Ask lots of questions and make sure they have answers that satisfy you. Finding a Lender who fully understands your needs and has great communication skills will make the process much easier.
Once you have made your decision on the right mortgage lender, they will get you pre-approved. The lender will actually pull your credit and get more information about you. However, you could even take it one step further by getting an actual approval before you start home shopping. That way, when you're ready to make an offer, it will make the sale go much quicker. Having an approval will make your offer more appealing than other buyers since your financing is guaranteed.
Step 4: Look for the Right Home
Make a list of the things you'll need to have in the house. Ask yourself how many bedrooms and bathrooms you'll need and get an idea of how much space you desire. How big do you want the kitchen to be? Do you need lots of closets and cabinet space? Do you need a big yard for your kids and/or pets to play in?
Once you've made a list of your must-have's, don't forget to think about the kind of neighborhood you want, types of schools in the area, the length of your commute to and from work, and the convenience of local shopping. Take into account your safety concerns as well as how good the rate of home appreciation is in the area.
Step 5: Make an Offer on the Home
Now that you've found the home you want, you have to make an offer. I will provide you with recently sold homes in the area, aka the Comps. Keep in mind the seller may make a counter-offer to which you can also counter-offer. But you don't want to go back and forth too much. Somewhere, you have to meet in the middle. Once you've agreed on a price you will be "under contract".
Yay!!! I'm Under Contract, What's Next?
Step 6: Inspections
The Home Inspection is highly recommended. This will be an additional cost but could save you lots of headaches and money down the road. A qualified Home Inspector will provide a very detailed report of all areas inspected. In addition to the Home Inspector it may be necessary to have a Roofer, Plumber, Electrician, HVAC Contractor or a Foundation Contractor take a deeper look at any specific area of concerns found. In addition to the Home Inspection the lender will most likely required a Wood Destroying Insect Report be provided. This report will be furnished by a Licensed Pest Control Company after they have inspected the home as well. This will be an additional cost as well.
After all the inspection reports have been received we will go over each report in detail. Now is the time to request repairs by the seller. The seller has the option of agreeing to all requested repairs, some repairs or to no repairs. Remember if you are not satisfied with the Seller's Response you can walk away from the deal.
Step 7: Time for the Appraisal!!!
Now it's time for the Appraisal. The lender will be responsible for ordering the appraisal and will most likely required you to pay the appraisal fee upfront. The Appraiser will inspect the home and will look for comparables to determine the appraised value. If the appraisal comes back at or above the agreed upon sales price we are ready to proceed forward to closing. If the appraisal comes back below the agreed upon sales price or has been flagged with repairs we will need to go back to the seller to discuss.
Step 8: Closing Day, Let's Move In!
Finally, it's time to schedule the closing. Dates and Times will be coordinated to meet the needs of all parties. Your Lender will get the final numbers to you and you will be required to get a Cashier's Check for Closing Costs and Down Payment made payable to the Title Attorney or you can have the required funds wired.
Whether you use a mover or not is up to you, depending on your financial situation and how much stuff you have to move; perhaps also, whether you have a lot of friends willing to help you move. Either way, you're done with the home buying process! Just start unpacking and start enjoying your new home!