You're ready to take the plunge. You're excited but feeling a little overwhelmed about your decision to purchase your first home. After all, it's likely going to be the largest purchase you've ever made, and you're still a little uncertain about making such a commitment. Plus, it's a long and challenging process, right?
Not necessarily. Of course, there will be plenty of stressors associated with home buying, but if you do it right and understand what lies in front of you, there's no reason for this to be anything other than a pleasant transaction!
Very simply put, there are 8 steps you need to progress through before you have the keys to your new home in your hand.
Choose a Realtor
Start by interviewing several realtors in your area to find one that 1) has a solid knowledge of the neighborhood(s) in which you're looking; 2) has a personality you can live with, and 3) has the skills necessary to make your transaction go smoothly.
How do you know if that will happen? Ask questions! Interview each agent you're considering, preferably in person. Ask them specifics about the neighborhood(s) you're thinking and about the buying process in general. Be clear that they are just one of several that you are interviewing and let each know that you will get back to them with your decision promptly.
Opt for a Mortgage Pre-Approval
This could actually happen before you choose a realtor or can happen concurrently. (Chances are the realtors interviewing will ask if you're pre-approved.)
Obviously, with a pre-approval, the agent can better suggest what kind of homes you can afford in the area you prefer or if you need to reconsider that area and look for something more in-tune with your pre-approval amount.
If you don't know where to go for pre-approval, the realtor you choose may be able to steer you towards reliable mortgage brokers with whom they've worked in the past.
Now that you know how much you can afford to buy, it's time to start perusing photos and videos of homes that fit the bill. Real estate that is listed in the Multiple Listing Service (MLS) can be found online and is an excellent tool for beginning your search. Your agent can direct you to that site.
Of course, many people choose to also look at sites such as Zillow, but be aware that the information isn't always accurate nor updated on such sites. Nonetheless, if you see something on these websites or apps that is attractive to you, you can call your agent and allow him to inquire for you. You must follow this chain of command – so to speak – to protect both you and your agent.
Making an Offer
So, you've found the perfect home in the perfect location. Now it's time to make the moves necessary to make it your own. That involves, of course, making a reasonable offer for the property.
This is where you really need your agent's guidance. Too many potential buyers are hooked on cable TV shows where they watch "buyers" come in with unreasonably low offers, which are then happily accepted by the seller. That's more the exception than the rule. You should be prepared to make an offer that is consistent with pricing in the area, even if it's full price or close to full price.
Your offer will also depend on the state of the market in your chosen area. In a buyer's market, you'll have a little more flexibility of price than in a seller's market, where the seller holds the keys to the deal.
Hopefully, your first offer on the first home you bid on will be accepted. Of course, that doesn't always happen. Sometimes you'll get a flat-out "no," while other times, your agent will need to do some negotiating with the seller's agent. This back-and-forth can sometimes take several days to reach a conclusion but, hopefully, you'll be able to agree on the terms and get on your way to becoming the owner of your chosen property.
The time between the offer acceptance and the closing truly involves lots of paperwork. All sorts of things will be happening during this period, which usually lasts about 60-90 days but can be shorter depending on the parameters of the deal.
You'll be submitting more paperwork for loan approval. A home inspection and other sorts of inspections will also be occurring during this time, depending on the rules of where you live. (For example, you might be required to get a termite or radon inspection.)
The conveyancer will also order an appraisal of your new home to determine that the amount being paid is fair and in line with what the mortgage company is willing to loan on such a property. That person will also check the title on the property to make sure it is "clean" and that no one has liens against the property other than what has already been disclosed.
Once all the paperwork is complete and the loan approved, it's time to go to settlement. But right before that, you'll do a walk-through of the property with your agent and (sometimes) the seller's agent to determine that everything was left in good condition and that all the things that were supposed to be included (like appliances) are where they should be. If repairs were to be made as per the contract with the seller, you'd check for these at this time as well.
Bam! You're a Homeowner!
Finally, it's time to head to settlement or closing. This means your mortgage company has released all the funds, and you can go ahead and sign all the necessary paperwork that makes you the owner of your chosen home. This generally takes an hour or so, depending on whether the seller is present or has pre-signed everything in advance, and it will likely take place at a bank or title company or one of the real estate offices involved in the transaction.
Only one thing remains. It's time for the seller to hand over the keys and for you to head to your new home, where you'll open the door to years of happiness in the place you choose, especially for you!