Home Buying: In 4 Easy Steps
Buying a home can be a complicated, stressful process. Here are 4 steps to help you confidently find your new home.
You’ve crunched the numbers, thought about your lifestyle, and made the decision to buy a home. It can be a complicated, stressful process. But knowing what to expect can reduce some of that anxiety and help you confidently find your way to your new home.
To help, here’s a step-by-step guide to the home-buying process. You don’t want to find the perfect place first, only to have a better-prepared buyer swoop in and snag it.
1. Loan Pre-approval (Skip to Step 2 if you are an all-cash buyer)
The first step is to contact a lender (mortgage broker or bank) to get pre-approved for a loan. Your loan officer will review your financials (income, debt, savings, credit score, etc.) to determine the amount that you can borrow. Based on this, we can figure out your budget for your home purchase. Your loan officer will issue you a pre-approval letter stating the loan amount you qualify for and you will need to submit this letter whenever you make an offer on a property. It is important to do this step first because you may find out that you qualify for more or less than you thought, and if you have any issues that may prevent you from qualifying, we can figure how we can fix these problems.
Step 2. Property Search
Once you have your budget, you can start your property search! I will send you any listings that fit your criteria and schedule appointments to show you any property you are interested in.
Step 3. Offers and Escrow
When we find the right property, we will submit an offer contract along with:
Statement or Screenshot of your bank account, investment account showing the down payment amount
Credit report showing FICO score (optional, but helpful!)
Some of the important terms of the offer contract to be aware of:
Escrow Period – This is the number of days from the date of acceptance that the closing date falls on. The escrow company is the third party company that is handling the transaction process for us.
Inspection Contingency Period – Once you have an accepted offer, you have a set amount of time to bring any inspectors, contractors, family members, etc. to come to look at the house. If you find anything wrong with the house, you can request for the seller to repair it or provide a credit to repair it, or if you cannot come to an agreement on terms, you can back out without losing your deposit within the contingency period. The shorter your inspection period, the more attractive your offer is to a Seller.
Appraisal Contingency Period – If you are getting a loan, you have a set amount of time for your lender to send an appraiser to the property to appraise the value of the property. If the property appraises for lower than your contracted purchase price, you have the opportunity to renegotiate the price with the seller or back out without losing your deposit if you cannot accept the appraised value.
Loan Contingency Period – If you are getting a loan, you have a set amount of time to get your final loan approved through your lender. This is why it is so important to get pre-approved and send all your documentation to your lender ahead of time. If for some reason, after further review of all of your documentation, you cannot qualify for the loan, you can back out without losing your deposit.
Step 4. Final Walk-Through and Closing!
A few days before the closing date, we will do a final walkthrough of the property to make sure that the condition of the property has remained the same (although this is not a condition of the sale). Around the same time, you will wire your final closing funds to escrow and your lender will wire your loan amount to escrow. We may receive the closing confirmation anytime during business hours on the closing day, it just depends on how far back in line we are with the county recorder’s office. Once escrow has all of the funds, they will schedule a recording of the grant deed with the county. Once we receive confirmation of closing from the county, you are officially the homeowner and can receive your keys!