Buying a home sounds like a major commitment—because it is. If you’ve never done this before, your anxiety is only compounded by the uncertainty you’re facing. What person do you talk to? Whom do you pay? How long does it all take? Fortunately, the process of buying a home isn’t as perplexing as you might believe. To dispel your confusion, here’s a brief step-by-step overview of the procedure.
Before you buy a home, you have to make sure that you should be buying a home. You need to analyze your finances (including your credit score) to ensure that you can handle all the expenses involved with home ownership. It’s also best if you obtain mortgage pre-approval from a lender. If you don’t have your finances sorted out, then you may have to delay your home-buying plans to a future time.
✔Find the Right Home
Now you need to locate the home you’d like to purchase. This is another reason why it’s best to go through the mortgage pre-approval process: It helps narrow down your range of choices by excluding areas that are effectively out of your financial reach. You need to figure out your family’s residential needs—not just those that are applicable today but, also, years down the road.
Potentially relevant factors include the number of bedrooms in the residence and its proximity to schools in the area. You should also determine what kind of residence you need. Some people start out hoping to buy a home, only to decide later on that a condominium or a co-op is really the best option for them. You may even wish to contact new home builders in the area to look into the possibility of constructing a home from scratch. This option can be expensive, but it’s also an opportunity to buy a home that precisely fits your preferred specifications.
✔Assemble Your Team
Buying a home usually requires the involvement of professionals from a number of related fields.
- Real Estate Agent – A good agent can be a fantastic ally in your house-hunting expedition, providing expert advice and helping you manage a variety of obstacles.
- Inspector – A home inspector can examine your dream home and ensure that no hidden defects exist. They’ll also be able to determine the extent of any repairs or renovations that should be made.
- Insurance Broker – Mortgage life insurance can protect your assets if disaster should strike before you can pay off your mortgage.
- Surveyor – You may need to have a surveyor take a look at the property in order to secure a mortgage.
- Appraiser – How much is the property really worth? An appraiser will be able to tell you.
- Lawyer – Your attorney can help you avoid legal pitfalls that might arise, such as an undisclosed lien on the home.
- Mortgage Lender – You’ll need one to get that all-important mortgage for you. Bear in mind that possessing a mortgage pre-approval does not guarantee that you’ll be able to secure a mortgage.
✔Make a Formal Offer
Having located your home and put together your team, now is the time to present the seller of the home with a contract known as an “offer to purchase.” Your real estate agent will be able to assist you with this. The contract must list the amount of your purchase price and your deposit, as well as the closing date of the transaction (i.e., when you legally take possession of the property).
If a home inspection has yet to be completed, then your offer should be made conditional on a positive assessment. You may have to go back and forth for a while before you settle on a deal acceptable to both parties.
✔Obtain the Mortgage
If you’ve already gone through the pre-approval process, then you’re in fairly good shape when it comes to obtaining a mortgage—but it’s still possible that you’ll encounter snags at this stage. It’s essential to cooperate fully with your mortgage lender by providing them with the information they may need from you, including tax assessments, inspection reports, and appraisal data.
This is the final step in the process—the day when you officially become the owner of the home. By now, all inspections, surveys, and legal issues should have been sorted out. Your mortgage lender will transfer the funds (via your lawyer) to the seller. You hand over the down payment plus any applicable closing costs (e.g., land transfer tax—generally 0.5% to 2.5% of the total price). Your attorney will formally register the home in your name.
The property is now yours!