If only buying a home were as easy as “1-Click Ordering” on Amazon.com. Many people do not understand the process or what to expect when buying their first home and just try to figure it out as they go along. Let us help you avoid the confusion and any potential first-time home buyer mistakes. Here is a breakdown of the homebuying process.
Where do I Begin?
Aside from identifying your housing needs, determining your budget, and getting pre-approved for a mortgage, you’ll also want to be sure of exactly what you’re looking for. Identify what you want and need in your future home as well as the area, and what you are and are not willing to work with. Here are some basic things to consider:
- Where exactly do you want to live?
- Is the school district a factor or going to be a factor in the next 5 years?
- What type of home best suit you (condo, townhouse, single family, etc.)?
- What are your must have features (one story, basement, 3 car garage, etc.)?
- How important is the style of the home and what styles do you like?
- Are you wanting to do some of your own improvements or do you prefer a home that is move-in-ready?
- Do you want to be near public transportation and other amenities?
- How many bedrooms and bathrooms will you need?
- Do you want/need a yard?
Do I have the funds?
There are often many expenses due before or at closing aside from just the down payment. Here are some other costs to prepare for:
- Earnest money.
- Earnest money is a deposit that a buyer makes to the seller when an offer is accepted and both parties have signed the sales contract. This shows the seller the good faith of the buyer.
- Closing costs.
- Closing costs are the amount that the buyer must pay at the time of closing to complete the transaction. They generally include the appraisal, loan origination fees, title insurance, homeowner’s insurance premiums, prorated property taxes, and recording fees.
More on closing costs: You will receive a disclosure notifying you of the total charges before your closing date. Closing costs are generally around 3% of the purchase price. Sometimes closing costs are used as a negotiation tool. In some cases, the seller will agree to pay some or part of the closing costs.
What does the timeline look like?
According to a survey by the National Association of Realtors most buyers spend 2 – 3 months looking at homes before making an offer on one. The total process from having your offer accepted and signing the contract to closing can take anywhere from 30 – 60 days, not including your House HUNT or getting pre-approved (which is now a requirement). Here are some of the steps:
- Negotiating and submitting your offer (1-5 days)
- Both parties signing the sales contract (1-3 days)
- Securing financing (21-30 days, sometimes longer)
- Professional home inspection (7-10 days)
After the contract is accepted, it’s mostly a waiting game. At this point, the transaction is in the hands of the lender, and any mishap can potentially cause delays. It is extremely important that fill out, sign, and return any documents required by title or the lender without delay, as this is the one aspect in your hands at this point.