A Quick Guide to Home Buying

Here is the home buying process outlined in 12 clear steps

1. Check Your Credit
Credit scores have always been important for home buyers, but even more so today, as lenders have tightened their guidelines.
So your first step should be to review your financial situation. You can order your credit reports yourself from Experian, Equifax and TransUnion, and check them for errors. You will also need to order your credit score (different from your reports) to see how you stack up against the national average.
Even more effectively, contact us.  We will pull your entire credit report, including your scores and will discuss exactly where you stand credit-wise.  While we don’t do credit counseling, we can offer sound advice on ways to improve your scores.  Keep in mind, it is best to get good advice from a loan professional!  Too many times, a consumer can make drastic credit errors by paying on old accounts or by closing accounts.  Talk to a professional; that’s what we’re trained for!
2. Determine Your Budget
Decide the amount of payment that you feel comfortable with.  A lender can tell you the amount you qualify for — but you must decide the amount you feel is right for you.  Talk to your loan officer and make sure they understand exactly what you are looking for in a payment and then they can help you tailor the loan amount so that you will be happy with your purchase.
3. Research and Choose a Type of Mortgage
There are many types of loans.  For most home buyers, an FHA-insured loan or a conventional loan will be the best choice.  Take a few moments to read over the Available Loans section of this website to get some more information on different types of loans.  Of course, we will be glad to discuss the type of loan that will be the best option for you based on your credit, cash reserves, and job history.
4. Get Pre-Approved for a Loan
Pre-approval is a process in which the mortgage lender reviews your financial and credit history to determine your “creditworthiness” … an industry term that means: “How much of a risk is this person, and how much are we comfortable lending?” When you get pre-approved for a certain loan amount, there’s a good chance that you’ll receive final approval for that amount as well, when the time comes.
Having a pre-approval letter in hand also shows sellers that you are serious about (and capable of) purchasing their home. This can make a big difference in hotter real estate markets, where the seller may receive multiple offers from competing buyers.
5. Find a Real Estate Agent
Due to the complexities of purchasing a home, it’s an excellent idea to retain a real estate professional.  These professionals are trained in the process; they know how to negotiate, what advantages and disadvantages to watch out for, and the best part, their commission is paid by the seller, not by the buyer.  So, you have everything to gain in using a good, reliable, and knowledgeable real estate agent.  Keep in mind, though, that the difference between a lovely home buying experience and a dreadful one can hinge on the agent you choose.  Ask your friends and relatives and take advantage of their experience. Then spend some time discussing what you want with a perspective agent to see if you feel comfortable working with this individual and with their knowledge level.
6. Narrow Your Search
The neighborhood you choose is nearly as important as the house itself, because both have a direct bearing on your quality of life — not to mention the future resale value.  Talk to your agent frankly, make sure they understand exactly what you are looking for…and where.  They will be very helpful in asking you all the right questions so that you can pin-point exactly the property you are wanting.
7. Begin House Hunting
This is where you and your agent visit properties in order to find one that matches your needs. Here are some helpful tips. Take a digital camera with you to get pictures of each home. This will help you recall the details later on. Bring a notepad as well, and for the same reason. While you’re at it, you might want to bring a friend along for an unbiased opinion of each property — you know, that outspoken friend who calls it like it is.
8. Evaluate the Asking Price
It’s referred to as the “asking price” for a good reason. Just because a property is listed at $250,000 doesn’t necessarily mean it’s worth that amount. This is another area where it helps to have a real estate agent. Most agents are expert at validating sale prices against recent sales in the area, and that’s the best way to find out if the price is realistic or inflated.
9. Make an Offer
Once you’ve determined that the price is fair and reasonable, you are ready to make an offer on the property. Always make the offer contingent upon the home inspection (see next item). That way, if the inspector uncovers an issue that you consider a deal breaker, you have a way out of the contract. Ask your agent about contingencies.
10. Get a Home Inspection
Most inspections only cost a few hundred dollars. That’s a small price to pay for the peace of mind you get in return. A home inspector will review the structural and mechanical aspects of the house, including (but not limited to) the roof, foundation, electrical, and heating / cooling system.
11. Attend the Closing / Settlement Process
So, you’ve made it through all of the inspections and the process is still on track. Great! The next step will be the closing / settlement process (it goes by different names in different parts of the country). Actually, you can prepare for this process early on by putting extra money aside. Closing is when the title to the property is transferred from the seller to the buyer.  After your and the seller sign the closing documents, the lender sends the money to the title company to distribute to all parties.  This is called Funding and after Funding (which usually happens on the same day or the next morning after Closing), you will receive the keys to your new home.  CONGRATULATIONS!
12. Tie Up Loose Ends
After your move, you’ll have a few more things on your task list. Transfer your utilities if you haven’t done so already. Complete a change-of-address form with the post office. Get a safe deposit box for your home insurance policy and other important documents. Set up a mortgage payment schedule or an online auto-pay system. And give yourself a pat on the back … you’re now a homeowner!