Step 1: Understand What You Can Afford
Check Your Credit
Get a copy of your credit report a few months before you begin shopping for a loan to ensure its accuracy. Have any mistakes you find corrected.
Understand Your Finances
Get very familiar with your finances – your income, debts, savings, and monthly expenditures – to assess how much you may be able to afford. When looking at your savings, remember to account for the down payment and closing costs.
Step 2: Find the Right Home
Single-Family, Condominium or Other?
Determine the type of home you want for your lifestyle and budget. Single-family home, condominium or townhouse? Ask yourself if you’re comfortable with the maintenance that can come with single-family living, or if you prefer the lower maintenance condominiums can provide.
Determine Your Location
Where do you want to live – city, suburbs, or country? How far are you willing to drive to and from work and school, as well as your friends and family? Location is one of the most important factors to consider when finding the right home.
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Step 3: Find Your Team
Find a Real Estate Agent
Your real estate agent is your partner in the homebuying process. It’s important to find someone who is experienced and with whom you are comfortable. If you don’t know any real estate agents, reach out to friends, family and colleagues for references.
Find a Lender
Your lender will play a significant role in your homebuying experience. It’s important that you find someone who is trustworthy and offers competitive terms. If you don’t have a lender, reach out to friends, family and colleagues for references and be sure to call several lenders to get the best rates and terms.
Contact a Housing Counselor
Housing Counselors are important professionals to consider when buying a home. They can help you assess your finances, improve your credit, and ensure that you are well-prepared for homeownership.
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Step 4: Finance Your Purchase & Begin Your Search
To get pre-approved, you’ll complete your lender’s loan application form, providing them with important information about your credit report, debt, work history, down payment, and residential history. If pre-approved, your lender will provide you with a pre-approval letter outlining how much you are qualified to borrow. Be sure to ask your lender how long this letter will remain valid.
Start House Hunting
Now that you know how much you can afford, it’s time to start your home search with confidence. Your real estate agent will be with you every step of the way.
Tools to get started
Did you know the typical homebuyer searches for 10 weeks and looks at 10 homes before buying?
Step 5: Make an Offer
Make Your Offer
Your real estate agent will help you determine an offer price that is fair, based on experience and looking at comparable homes in the neighborhood. Your agent will submit an offer letter to the seller’s agent that will include a deadline for them to respond, typically one to two days.
Negotiate the Offer
The seller may counter your initial offer. Counter offers typically include things like asking for more money or adjusting the date of closing. Your agent will handle the discussions, negotiating on your behalf for the most favorable terms.
Sign The Purchase Agreement
Once you and the seller agree on the purchase price and other terms, all parties will sign the purchase agreement. At this point, you are in a binding contract with the seller.
You’ll need to provide your lender with a copy of the signed purchase agreement. At this time, you’ll work with your lender to finalize the loan application process to obtain final mortgage approval.
Step 6: Inspect and Appraise the Home
Conduct a Home Appraisal
Your lender will schedule a professional appraiser to visit the home to determine its value. The value is based on the home’s condition and comparable homes in the neighborhood. The lender will want the appraised value to meet the value of the loan. It’s strongly recommended that you make the home purchase contingent on the appraisal.
Conduct a Home Inspection
Your real estate agent will schedule a home inspection to determine the condition of the structure and report back on any significant repairs that are required or recommended. It’s strongly recommended that you make the home purchase contingent on the home inspection.
Step 7: Closing
- Once your loan is approved, your lender will schedule the closing – one of the most important parts of the homebuying process. Closing is the final step to homeownership that involves all parties signing final documents and legally transferring the property, and keys, to you.