Oct 04 2021

Buying a Home in 10 Easy Steps

Thinking of buying a new home? Congratulations! Whether this is your first house, or you’ve been through this process before, it is an extremely exciting time.

Thinking of buying a new home? Congratulations! Whether this is your first house, or you’ve been through this process before, it is an extremely exciting time. With some care and planning buying real estate can be a fun and rewarding experience. Here are the 10 steps to expect that will take you from dreaming about a new home to having the keys in hand!

Step One: Get Pre-Approved for a Mortgage Loan

It may seem early in the process to be thinking about financing a property you haven’t even identified yet, but getting pre-approved at the start can help set your home purchase up for success. Your Mortgage Loan Officer will ask you questions about your plans for the home, your finances, your employment, and come up with the dollar amount you are pre-approved to borrow, as well as the loan programs that may be a good fit for your scenario.

Ready to Get Pre-Approved now? Give us a call to speak with one of our mortgage experts!

Step Two: Set Your Home Buying Budget & Wish List

Once you know what you are pre-approved to borrow it’s time to figure out how much you are comfortable spending on your new home. Consider the amount needed for a down payment if applicable. (Low and no money down programs may help lower your up-front costs.) Think about your monthly expenses such as your mortgage payment, real estate taxes, and homeowner’s insurance. Look at your existing expenses and factor in saving for a rainy day, long term savings, and other financial goals you may have. When buying a home, it’s important to plan for the cost of home maintenance and repairs as well.

This is also a great time to create a wish list for your new home. What are the features you would most like to have, and what are some “nice to have” items? Think about location, square footage, architectural style, number of bedrooms, number of floors, the yard, and any aspects that are important to you. It might not be possible to find one property with everything on your list, but identifying what matters most will be helpful when it comes time to decide which listings to view.

Step Three: Find a Real Estate Agent

Working with an experienced real estate agent can help the process go smoothly. They will be your advocate every step of the way, negotiating pricing and terms on your behalf. They can highlight potential red flags in a particular property and help identify homes that are a great value, and which might be overpriced.

Do you need a recommendation for a real estate agent? Contact us!

Step Four: Browse Real Estate Listings

This is the fun part! Your real estate agent will likely provide some listings for you to look at based on what you hope to find in your new home, and you can also search available homes for sale. It can be helpful to look at listings for properties that are a little outside your parameters – you might stumble on a great deal that is a bit below your price range, or a dream house a neighborhood or two over from where your search is centered.

Once you find several homes you are very interested in, your real estate agent can arrange showings so you can tour the homes in person. Take notes on each property to help remember what you loved and didn’t like about them.

Step Five: Make an Offer

It might be the first home you see or the tenth, but when you find the property that fits your budget, has many of the features on your wish list, and just feels right – it’s time to make an offer! Your real estate agent will guide you through deciding on a price and terms for your offer, and present it to the seller’s agent. Including your pre-approval letter will strengthen your position, and help give the sellers confidence that you will have no trouble obtaining financing for the purchase.

Step Six: Apply for a Mortgage

When your offer has been accepted and you are under contract on the property you can move forward with your formal mortgage application. You will work with your mortgage loan originator to select the program that will be the best fit for your scenario, such as an FHA Loan, VA Mortgage, Conventional, or Non-QM product. Much of the information will have been gathered during the pre-approval process, but you will be asked to provide additional information and documentation to complete the full application.

Ready to apply for a new home loan? Contact us to get started!

Step Seven: Arrange Homeowners Insurance

To protect your investment in your new home it’s important to have homeowner’s insurance coverage. Depending on your location you may also be required to have, or want to consider specialty coverage such as flood, wind and hail, landslide, and/or earthquake coverage.

Step Eight: Get the Home Appraised and Inspected

To help determine that your home is worth what you’re paying, and is in the condition you are expecting, it’s customary to have the home evaluated by professionals. A residential real estate appraiser will evaluate the property and based on comparing it to other similar homes that have recently sold nearby, determine its current market value. A home inspector will thoroughly investigate the home, looking at the structure, appliances, electrical, plumbing, and hvac systems, and more as applicable. You will receive a report detailing any items that require maintenance or repair.

If any significant work on the property is needed your real estate agent may negotiate with the seller to see if they are willing to cover some or all of the cost.

Step Nine: The Final Walkthrough

Often occurring on the morning of closing, the final walkthrough is an opportunity to take one last look at the home before it becomes yours. You and your real estate agent will tour the property and make sure everything is as it should be and that any agreed upon repairs have been completed. Then it’s time to head to closing!

Step Ten: Close on Your New Home!

The most exciting day of the home buying process, the closing is where everything becomes official. You and the sellers will sign several documents completing the transaction, and the sale of the property. After the paperwork is complete, the funds have been transferred, and the deed recorded, you will be the official owners of your new home!

These days, more and more people are looking to buy their dream homes, especially as remote work and work-from-home setups have become an enduring trend. A 15 point increase in requests for home tours and other home-buying services, along with a 11% rise in Google searches for homes, indicate an uptick in demand to buy houses in the country. However, there is a definite worry about affordability when it comes to housing, especially as hefty price tags on available residences have kept the market just as competitive as before, if not more.

According to the latest reports from analysts, it’s not all bad for existing homebuyers and aspiring house hunters. As previous data shows, timing matters in the housing market, and working on different approaches to home buying – like through a reliable lender – can help advance you towards more affordable housing goals. Below, we discuss whether house hunters should buy now or wait, and why.

What is your financial situation?

Counter to the rise in home demand, there is a considerable lack of supply. Along with rising prices and interest rates, the housing market may seem like a highly competitive space with wealthy homeowners fighting for what little property is left. It can be overwhelming, but knowing where you stand financially can help you better strategize your home buying journey. Following the four key components of affordability, ask yourself:

How much do you have saved for a down payment?
How much does your household earn?
What debts do you carry?
What is your credit score?

Familiarizing yourself with these components will help inform your decision on whether or not to wait. For example, taking the time to improve your credit scores before committing can save you from higher interest rates in terms of your monthly mortgage payments. Alternatively, many young homebuyers are compromising by living with family for a significant amount time to save up for a down payment. Getting this out of the way when you’re able to can help you get better loans to buy sooner than later in case interest rates end up increasing.

What kind of home is best for you?

Buying a home is a huge purchase and a big commitment. With shifts to digital and remote ways of working taking place in recent years, this has provided homebuyers with opportunities to be more flexible when buying homes. Homes in areas away from busy cities and urban hubs, for example, are considerably cheaper. This makes them a perfect option for buyers who work from home, or aren’t required to be present in the office on a consistent basis.

The lifestyle you expect to live is as much a factor to consider as money. Condos and townhouses offer lower maintenance costs in the long run, and are perfect for smaller households when compared to single-family homes. If the household grows, homebuyers looking for a side income can even invest in renting out purchased properties to passively earn back what they spent and look into bigger properties for family use.

What does the future look like?

In a previous post, we talked about the rising mortgage and interest rates. While the market may seem bleak or intimidating in its current condition, housing experts also believe factors such as supply have a high chance of returning to pre-pandemic levels by the end of 2024. If you are financially able, buying now while others may be intimidated by the prices can give you an edge. Conversely, taking some time to get your finances in order can benefit you when it comes to securing better loans and lower interest rates.

Working with experts can help you make better decisions for the loans you need, making sure you don’t get trapped with high interest rates or hidden charges. The future of fintech suggests that big data is the future of loans, as more online lenders are now using algorithms, which predict potential defaults better than FICO scores do. Data is also leveraged precisely to identify customers who fit various products well — which can give you peace of mind, as an aspiring borrower. Here at City Lending for example, we find the right programs to fit your needs and profile, making sure you get some of the lowest down payments and interest rates along with a premium service.

And if you’re still unsure, it’s worth considering that waiting it out in the market’s current wild conditions could result in even higher interest rates in the future. At the end of the day, buying a house is ultimately a huge investment, which comes with benefits such as privacy and a financial investment that for the most part will weather most economic storms.

Find out if this is the right time for you to get a house by contacting one of our loan officers today.