When you’re getting ready to buy a home, knowing what to expect makes everything easier. It all begins with shopping for a mortgage and ends with closing on the home—with several steps in between. Here Trulia explains what to expect, so the entire process will go much more smoothly.
1. Shop for a mortgage
Shopping for your mortgage first lets you know how much house you can afford. Plus, once you’re pre-approved, sellers will know you’re serious and ready to buy. Before you apply, have readily available copies of your bank statements, pay stubs, and W-2 forms and tax returns for the past two years.
2. Hire a real estate agent
Buyers don’t pay an agent’s commission—sellers do—so there’s no benefit to going without a real estate agent. Plus, you have a lot to gain. Agents have expertise in the buying process, neighborhoods, the market and negotiation. You also will get through the home-buying process faster with an agent. To find a trusted agent, first ask for referrals from friends and family. If you don’t know anyone who has purchased a home in your area, online reviews can help you identify the best agent for your needs. And a face-to-face meeting is the best way to finalize your decision.
3. Make a list of needs and wants
You’ll be a more efficient shopper if you know exactly what you’re looking for. How many bedrooms and bathrooms will you need? How much property do you want? Think about location, too. Do you want to live close to work, extended family, downtown? The type of neighborhood factors in as well. Do you want a family friendly neighborhood with good schools? Do you long to walk to shops and restaurants? Split your list into must-have features and nice-to-have features. Once you have an idea of what you want, trim your list to include only the homes that are a good fit.
4. Search property listings
You likely will look at dozens—or even hundreds—of homes online. Your needs and wants list will help you narrow down your options, as well as help you determine if your budget and your home dreams align. To start, make a short list of properties that fit your needs.
5. Visit homes
Visit as many properties as you can with your agent. Even if you fall in love with the first house you see, commit to seeing as many on your list as possible. Comparison shopping is important, and you’ll learn more about the market with every home you walk through. And you might just fall more in love with another home.
6. Make an offer and negotiate
Your real estate agent can guide you on what type of offer to make based on factors such as the home’s asking price, the market and how much you want the house. If you’re in a competitive market, some agents will recommend writing a personal note to the seller. If sellers are in a position to choose from among several buyers, they may pick someone with a lower bid who seems to love their house as much as they do. The seller might approve your initial offer, or they may engage in negotiations.
7. Get your loan approved
If your offer is accepted, it’s time to get official. Being pre-approved for a mortgage means you’re likely to get the mortgage. Go back to your lender, and let them know you’re ready to move forward with the process. Your lender will order an appraisal and have you sign some more paperwork. Your loan application will then enter the underwriting stage before it’s approved
8. Hire a housing inspector
Do your due diligence by hiring a housing inspector who can let you know what issues a house might have. Every house will have some, but not all problems are deal breakers. Your inspector can’t tell you whether to buy or not, but the inspector’s report will help you decide what to do. Enlist the help of your real estate agent or a trusted homeowner to help guide you.
9. Wait for the appraisal
A bank won’t finance a home for more than it’s worth, so getting your loan depends on the appraisal. An appraisal is an expert determination of a property’s value. If the appraisal comes in at or more than the price you offered to pay, it’s time to celebrate. But if the appraisal comes in lower than your offer, you may need to come up with extra cash, renegotiate the price or forget about that particular home.
10. Close on your home
You’ve reached the finish line…after you pay closing costs, that is. Closing costs typically represent 2 percent to 5 percent of the home’s purchase price. These costs generally include attorney fees, appraisal fees, your down payment, homeowner’s insurance and property taxes. You’ll pay these during a meeting—your closing—where you’ll sign all the paperwork and walk away with the keys.
