The Home Buying Process
According to recent survey data from the National Association of Realtors, purchasing a home still remains part of the “American Dream.” Buying a home, especially your first home, can be an exciting, emotional, and sometimes scary process. Before searching online listings and attending open houses, you’ll want to do some research about the homebuying process. This newfound knowledge will empower you to make decisions that are in the best interest of your family and banking account.
Of course, some details may vary from state to state so be sure to consult with the real estate professionals at Berkshire Hathaway HomeServices John M. Brabham Real Estate Agency to ensure you adhere to local laws and financing requirements. If you’re ready to make your dream, come true in 2021, here’s what you need to know about the home buying process:
- What’s your why? Buying a home is likely the largest purchase you will make in your lifetime, so it’s an endeavor that should not be taken lightly. Determine why you want to buy a home (i.e., school district, neighborhood amenities), preferred location, and ideal home features. Understanding this will help you define your goals and find a home that meets your needs and expectations.
- Check your credit. All consumers are entitled to a free credit report annually, obtainable from the three credit agencies (Equifax, Experian, and TransUnion). Once you receive your reports, review them for any errors or inconsistencies. Lenders use this score to determine creditworthiness and loan amounts, so the better your credit is, the better chances you’ll obtain a loan with favorable rates and terms.
- Create (and stick to) a budget. Know how much you can afford and how much your overall expenses will be by setting a household budget. This includes saving for a down payment, which should be 20% to avoid paying Private Mortgage Insurance (PMI) and having a nest egg of at least $10,000 for maintenance and unforeseen costs.
- Get pre-approved. With the current demand for homes is exceeding those on the market, obtaining a home loan pre-approval is one of the most important things you should do. Shop about and compare mortgage rates and terms from a minimum of three lenders to ensure you are getting the lowest possible rate. When you have a pre-approval letter from your lender, it shows you are a serious and legitimate homebuyer and gives the seller confidence that you will follow through with the purchase and closing.
- Hire a real estate agent. Interview several agents to ensure they understand your home buying goals and wishes. Once you select your agent, he or she will be able to show your properties based upon your criteria as well as provide other considerations to help you find your dream home.
- View multiple properties. Searching home listings online is a great start, but there’s no substitute for seeing the home in person as it gives you a feel for the neighborhood and the home itself. Your agent can answer any questions you have about the neighborhood and amenities. It’s also a good idea to have a “home buying checklist” with desired features and amenities for each property. When it comes time to compare homes, refer to this checklist to help make your final decision.
- Submit an offer. Once you’ve reviewed your notes, weighed the pros and cons for each property, and decided on “the one,” your agent will draft an offer. Your offer includes the offer price, pre-approval letter, proof of down-payment funds, and any contingencies (such as a report from a home inspection). Once accepted, a purchase agreement including the home price and the estimated closing date will be signed. As a buyer, you will also be asked to pay an earnest money deposit (1-2% of purchase price).
- Get the home inspected. A home inspection will give insight into the home’s potential structural and mechanical issues. Your agent should be able to recommend a qualified home inspector. Should there be any issues at the inspection, you can amend your offer to cover the cost of repairs or back out of the offer if a contingency is in place.
- Secure funding. It can take up to one month to complete financing, so it’s important to keep your credit and finances in check (i.e., don’t apply for credit or another loan) during this time. Additionally, stay in touch with your lender and be responsive to requests for additional information as this will expedite the process.
- Have a final walk-through. This is your final chance to view the home before it officially becomes yours, so take advantage of it. If the seller agreed to make repairs, ensure they were completed as agreed upon and that the home is in move-in condition. It is recommended your agent attends the walk-through as a witness. He or she can answer final questions or contact the seller if repairs or issues were not addressed.
- Close on your home. If everything checks out and is good to go, it’s time to make your home purchase official. The lender will provide you a closing disclosure three days before closing. The documentation will include the monthly payment, loan term, interest rate, any fees, and money needed to bring to your closing. At the closing, you’ll sign all the paperwork in the presence of the seller, your agent, and the closing agent. Once everything is signed and the monies transfer, the home is officially yours. Congratulations!
Berkshire Hathaway HomeServices John M. Brabham Real Estate Agency provides quality realtor services to Sumter, SC, and the surrounding areas. Our talented agents are experts in the Sumter real estate market and will help you buy or sell your home. Whatever your real estate needs, our team has the knowledge and expertise to help you! Call us today at (803) 775-1201 to schedule an appointment or visit us online. Follow us on Facebook for the latest news and tips!