Buying a home might seem like a huge undertaking. It’s not something you do every day, so you might not know what to expect and honestly, most buyers don’t. Learning the home buying process can take the mystery out of buying a new home and allow you to approach each step with confidence. It’s also important to choose the right professionals to guide you through the process.
Identify your real estate agent and lender; these professionals will be your guides though the process. Ask them questions and make sure it’s a good fit for you.
- Ask where they do business
- Ask for client reviews
- How long have they been in the business?
- How many customers are they working with?
Get a loan pre-approval; learn your budget and terms
- Your lender can help identify a variety of loan options for you. It’s best to find that sweet spot or comfort zone on what you want to spend. It’s important to not set yourself up to be putting all your eggs in one basket when it comes to making that mortgage payment every month. There’s still a quality of life you will want to maintain (going out for dinner, vacations, etc.)
- This can be the fun part because you get to go out and explore different neighborhoods and your agent can guide you through things to look for. When I walk through a house with my clients, I don’t look at the furniture or the shiny appliances or counters. I look for the things that could be potential issues or something an inspector may find. It’s important to try and get an idea of the home’s true condition.
Negotiate the price and terms
- Every situation and property is different and this is where having an agent is important. They will be able to advise you based from what they are seeing in the market and what the comparable properties are and give you the best advice, whether you’re competing with multiple offers or there are no other offers on the table.
Enter the contract period and place a deposit
- The first steps after your offer is accepted is to have your earnest money deposit (usually about 2%+ of price) delivered, typically to the title company. This is a way of showing good faith to complete the terms of the contract and sale but this is protected by contingencies in your contract (typically inspection, appraisal and financing). You’ll also start working with your lender to get your loan application completed and setting up insurance.
Perform home inspection(s)
- Most contracts in northern Virginia contain an inspection contingency of some sort. This gives you, the buyer, a certain amount of time (usually about 7 days) to have inspection(s) completed on the home. You’ll hire an inspector to come in and go through everything they can see of the home and provide you with a report. From there, you and your agent can discuss the report and depending on your contract terms, ask for items to be fixed before closing or to have the sellers to provide a credit at closing.
Receive the appraisal and obtain final loan approval
- The bank will send an appraiser out to the home to verify the home is worth what is on the contract. If it comes in under the contract sales price, there will likely be some more negotiating with the seller on the final sale price. We will also await loan approval after underwriting reviews your file.
Review all information and remove contingencies, if satisfied
- As closing gets close, you’ll receive a Closing Disclosure (CD) at least 3 days before closing. This document outlines your loan amount, monthly payments, all the fees for the transaction and much more.
Close on the new home
- Final Walk-through before closing to verify the home is in substantially the same condition and also check on any repairs.
- The title company will do the settlement. The signing agent will walk you through all the paperwork and answer any additional questions that you have. After signing your documents, you will get the keys to your new home!
That wasn’t so bad, was it!? As you can see, buying a home is really a series of small decisions. As long as you continue to find the information you receive acceptable, you will move through the process towards the close. If not...then you will cancel and start over with another property. Buying a home is exciting and understanding the process can help you avoid unnecessary stress. It’s also very important to have a good team (agent, lender, title) on YOUR side every step of the way through this sometimes crazy process!
Let me know if you have any questions about buying! Feel free to contact me through this link!