Buyers Guide

Overview of Home Buying Process

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Careful financial planning prepares you to succeed in today’s real estate market. Once you have fine-tuned your finances and budget, you can expect success when you enter the market. You’ll be ready to make a strong offer when you find the home that meets your goals and dreams.

As your real estate agent, I will advise you on home prices and help you negotiate a purchase that protects your current and long-term interests.

Keep reading to put yourself on the road to your new address.

Find an Agent

BUYING YOUR HOME STEP BY STEP

Financial Planning

Calculate your monthly income and assess how much you can afford for a home payment. Take into account that your budget must also pay for utilities, taxes, insurance, vehicles, food, savings, and fun.

Your home payment should be roughly 25% to 30% of your monthly household income.

You can find many online calculator tools to help you analyze your income and housing budget, such as these from Prosperity Home Loans.

Start saving for a down payment on a home purchase as well as closing costs.

If you’re able to save 20% of the purchase price for a down payment, you won’t have to worry about the extra monthly cost of mortgage insurance. However, many people choose to buy with lower down payments. The Federal Housing Administration (FHA) and Veterans Administration (VA) have loans that enable buying with low down payments if you qualify.

Payoff as many debts as possible.

You will want to improve your debt-to-income ratio so that you can demonstrate that you have the income to handle a home loan. It’s acceptable to have some existing debts when applying for a home loan, but your goal remains to limit them. With fewer debts in relation to your income, you will have more lending options and access to better interest rates.

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Think About Where You Want to Live

Location is very important when shopping for real estate. It influences your home’s long-term value and satisfaction with your purchase. The ideal location is not the same for everyone.

While you explore your options for where to live, pay attention to housing prices in those towns and neighborhoods. There will be price variations within a local area.

You’ll sort the information that you gather into the categories of locations you like and prices you can afford. Locations that meet both criteria will guide your home search.

What Happens Next...

1. Meet With a Lender

Collect your financial records about your income and debts. Get copies of your latest tax returns. A lender needs to view this financial information to begin your application.

A loan officer will evaluate your income, credit score, and debt-to-income ratio and calculate how much money you can theoretically borrow.

If all goes well, you will get a preapproval letter stating your ability to borrow up to a certain amount of money. You need this preapproval letter and money for a down payment to start seriously shopping for a home.

If your credit rating is problematic, a loan officer or mortgage broker can advise you how to improve your score. You may need to work on your credit score if you’re unable to qualify for a loan or an acceptable interest rate. While working on improving your credit, you can also save more money for a down payment.

2. Start Shopping

Find an Agent

Most people choose to shop for a home with the services of a real estate agent.

Ask an agent for a buyer consultation. During this meeting, you’ll discuss the locations that interest you, the type of house you need, and your budget.

As your agent, I’ll ask about your timeline for buying, especially if you have a lease. You’ll want to time your purchase near the time your lease ends or examine your lease to see what the buyout terms are for moving out early.

I’ll also show you existing homes for sale in the areas that interest you so that you can get an idea of current inventory.

To start looking at homes, we will complete the paperwork for a buyer services agreement. I will also ask for a copy of your preapproval letter.

After completing the paperwork with your agent, you’ll be ready to schedule home tours.

An agent aids greatly with finding and accessing homes for sale. Your agent will have access to the multiple listing service (MLS) and possess the ability to schedule home tours as soon as possible. As your agent, I will work with your schedule for your maximum convenience when home shopping.

Additionally, a Realtor will help you examine the seller's disclosures provided for homes and alert you to pertinent issues related to price and/or suitability for your goals.

3. Make an Offer

When you find a home you want, prepare an offer. As your agent, I will go over this paperwork with you in detail. This document will explain the price you wish to pay, any seller concessions you want to ask for, length of inspection period, estimated closing date, and other items.

Your offer paperwork needs to include your lender preapproval letter. This shows that you are in a financial position to close the sale.

A seller may accept, decline, or propose a counter offer. After some back and forth, both parties may arrive at a deal or part ways.

4. Offer Accepted

Once an offer is accepted by both sides, the buyer must provide the funds for the earnest money deposit.

Your next step is to initiate inspections of the property. At the same time, you will tell your lender that you have found a house. The lender will then know to move forward with the loan application.

During the inspection period, the buyer has the option to request repairs and/or a price adjustment or ask for nothing. You may also terminate the contract during this period.

5. Offer Moves Forward

As long as you don’t back out during inspections, your lender will continue processing your loan. The lender will order an appraisal. The results of the appraisal will hopefully align with the amount that you need to finance.

The lender will also continue to monitor your credit. Do not take out any new loans at this time because it will alter your debt-to-income ratio.

You will need to set up a home insurance policy to start on the day that you acquire the property. You can get a quote from your existing automobile insurer or shop around. It’s up to you.

6. Clear to Close

As long as nothing derails your loan (like a bad appraisal or job loss), your lender will clear the loan to close.

The closing day when you sign the loan paperwork will be scheduled. There will be a lot of paperwork.

Once the buyers and sellers sign everything and the lender funds the loan, you get the keys to your new house!

7. Talk to Me Today

This is a basic overview of the process of buying residential real estate. There are many details to navigate as you interact with various professionals at the real estate brokerage, lender, inspectors, and title company.

Please reach out to me with your questions. I can schedule a buyer consultation to discuss your specific needs and concerns.

Contact Tracy Falbe