This will demystify the homebuying process.
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Editor’s Note: This story originally appeared on Point2.
Searching for your dream home can be an exciting process, but also a difficult one to navigate. That’s because if you don’t know what to expect when looking for a house, you’re more likely to fall into one of the many pitfalls along the way.
However, a little knowledge goes a long way, and knowing what to expect during your home search can help you avoid the common mistakes made by many buyers. With that in mind, this brief guide will explain the entire process from start to finish.
Before we dive in, let’s go over the basic steps you’ll need to take in your homebuying journey:
One of the first steps in your homebuying journey is to hire an agent. You’re not obliged to, of course, but a real estate agent will make the journey flow much more smoothly. For instance, a good agent provides:
But, finding the right agent for you isn’t always easy. Therefore, it’s important to spend a bit of time looking for the right fit. Specifically, you can look at reviews online or ask friends and family for references in order to draw up a shortlist. Then, narrow it down by asking a few important questions:
Once you’ve found an agent who fits your needs, the search can begin. Be sure to discuss your criteria — such as budget, location, and amenities — so they know where to start.
Even with an agent, you can still search online for your dream home. After all, no one knows what you like as much as you do. Plus, online listing sites like Point2 allow you to filter your search by things like:
In addition, useful features — such as saving favorite listings — are also a big help. For instance, other handy Point2 features include:
This makes it easier than ever to browse homes for sale. Then, after you’ve found something you like, be sure to share it with your agent.
Your agent can also help you draw up an accurate budget. Once you know the figures, start shopping around for a mortgage. It’s worth speaking to several lenders to see who can give you the best deal.
Getting preapproved for a mortgage is an important step that can be really beneficial when you put an offer in. Granted, you don’t necessarily need to know the exact figures, but you should give the lender a ballpark figure to work with.
Once you’ve applied, the lender will do a thorough credit check and, based on their findings, will either accept or reject your preapproval request. If they approve it, you can approach sellers with homes in the right price bracket with proof that you have the means to purchase the house.
Nothing beats seeing the potential home of your dreams with your own eyes. Plus, this gives you a great opportunity to check out the neighborhood, as well as the home. Typically, an open house is a more informal option that allows you to see the home in the presence of other buyers, whereas a tour is generally more private and may not allow for as many opportunities to explore it on your own.
In either case, it’s good to prepare a few questions to ask the owner or their real estate agent. Ideally, you’ll want to find out as much as you can about:
Also, feel free to take a tape measure, notepad and pen, camera, and your real estate agent. Just remember that, when you visit, it’s likely that people are still living in the home. So, don’t open cupboards, wardrobes, or fridges, and avoid using the bathroom.
Once you’ve found a home that ticks all the right boxes, it’s time to make an offer. Although you might be tempted to rush in (especially in a hot market), it’s important to consult with your agent as to what type of offer to make. For example, should you offer the asking price? Higher? Lower? All options can be on the table.
You might also choose to negotiate. Perhaps you feel that the price is a little too high, but you’ll pay it as long as appliances are included. Really, anything goes when making an offer. The best advice is to make a conditional offer and wait for the results of the home inspection. And, even after negotiations begin, you may still go back and forth a few times until everyone is satisfied.
Don’t worry if you’re not great at negotiating. That’s your agent’s job. Simply tell them what you want and they’ll do the rest. Of course, a good agent will offer advice along the way regarding what they would consider a fair offer.
With an offer made, now is the time to have the home appraised and inspected. While similar, these are two different processes: A home appraiser examines the property and neighborhood alongside comparable sales to arrive at the market value of the home. This is required by the mortgage provider.
Meanwhile, the home inspection isn’t mandatory but is highly recommended. An inspector will evaluate the state of the property to highlight defects and potential issues. With this knowledge, you can either go ahead with the deal if you’re happy, walk away or renegotiate to have essential repairs completed or the price reduced.
If all goes well, the seller will accept your offer. Now, it’s time for you to keep your promise and secure the required financing. At this point, you may also have already made a small earnest money deposit into escrow, which is a third-party holding account that’s used until the deal is completed. But, now you need to pay the down payment and finalize the mortgage agreement with your lender.
You should already have a letter of preapproval from the lender. Now, you can give them the exact figures and decide what type of mortgage you’ll take out. Then, they’ll calculate your monthly payments based on your down payment; the total property price; length of the amortization period; interest rates; and type of mortgage, such as fixed or variable.
Before you can seal the deal, you’ll need to take care of the typical closing costs associated with buying a home. Again, it’s essential to budget for these in advance as they will build up. Generally speaking, here are some of the fees you can expect the closing costs to encompass:
Finally, with all the financing sorted out and the paperwork in order, you can sign the sale agreement. This will typically take place in the presence of both real estate agents (yours and the seller’s), as well as a real estate attorney.
Once you’ve signed on the dotted line, your down payment and other fees that you paid into the escrow account will be released to the seller and your lender will pay the remainder. And, you’ll get the keys and can prepare to move in on the agreed date.
Once you’ve seen the entire process, buying a house doesn’t seem so complicated after all. Of course, that’s not to say that it’s a walk in the park. Fortunately, professional help can go a long way, and it’s well worth delving a little deeper into each step so you know exactly what to expect.
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