Thanks to online shopping we have been spoiled with “one-click ordering.” Sadly, that’s not how buying a house works. It’s a complicated process with many moving parts. Luckily, we’ve been there before and are here to help show you a road map.
Where do I even start?
A great place to start is to set a budget, get your financial ducks in a row, decide what your housing needs are, and obtain a pre-approval letter. This is a lot to handle but you want to have a solid foundation and a good idea of what you are looking for. I can’t recommend a “wish list” enough.
Here are some things you should consider:
- Are schools a factor for you?
- Older or newer home?
- Fixer-upper or move-in-ready?
- How many bedrooms / bathrooms?
- Which part of town do you want to live in?
These are some questions to help you begin your wish list. Your wish list will grow and change as you look at more homes and see what’s out there.
Do I have enough savings?
- Earnest money is a deposit the buyer makes upon signing the sales contract to show good faith.
- Closing costs, include your appraisal, credit report, home insurance premiums, loan origination fees, property taxes (often prorated at closing, title insurance, recording fees, and closing attorney’s fees.
- Your down payment will also be required at the time of closing.
At least three days before your scheduled closing date you should receive a Closing Disclosure which will show your total charges. This can be compared to the Loan Estimate you received when you initially applied for the mortgage. You should expect your home’s closing fees to be around 3% of the purchase price.
You may be able to talk the seller into paying some or all of the closing costs. This is the way to go if your finances are really tight at the time of purchase. Another option is to have your lender roll closing costs into the mortgage. This option is less desirable because you will be paying interest on what could have been a one-time fee.
How long should this take?
According to a survey by the National Association of Realtors, you will most likely view around 10 homes over 10 weeks before you make an offer. Around half of those surveyed said finding the “just right” home was the most difficult part. Finding the right home is only the first step though.
The entire purchase process from the sales contract to closing will take about 30 to 45 days. This doesn’t count the time you spent searching for a home or getting pre-approved. Most contracts are written a max of 60 days out, so it really shouldn’t take over 60 days to close on your new home.
Here is a list of the typical steps and their time required:
- Submitting an offer and countering offers: 1-5 days
- signing a sales contract: 1-3 days
- Mortgage process: 21-30 days, sometimes longer
- home inspections: 7-10 days
After you sign the sales contract, unfortunately, most of the process is out of your hands. The best thing you can do is be responsive and handle anything that comes your way as quickly as possible. The waiting game can be stressful but the end result will be worth it. Hang in there.
Do I need a buyers agent?
An agent will know what’s selling for what price; Which neighborhoods are in demand or overpriced; and where homes are that fit your budget. Agents can also look up how long a home has been on the market, this will affect the home’s price and increase your bargaining power.
When talking with an agent, ask if they are acting as a dual agent. If an agent is working for the seller, keep that in mind, it doesn’t mean you shouldn’t use that agent but it does mean they may not have your best interest in mind. Agents are still bound by state licensing laws which require them to act in a fair and ethical manner.
Manage your expectations
Buying a home, especially your first home, will probably leave you with a feeling of information overload. You will receive guides, booklets, legally required disclosures, and more to read. It can be an overwhelming process for anyone.
Just be sure to stay within your budget and make sure this is the house for you. As long as you are happy with the home and it’s within your budget, the buying process will be behind you before you know it.