Are you buying a house for the first time? Not knowing what to expect can make things unnecessarily overwhelming and daunting. To help reduce the stress of the unknown, we've broken down the timeline to buying a home in this step-by-step guide.
Keep in mind that this is just a general guideline. As we've implemented digital mortgage tools, the timeline for buying a home has shortened substantially. Just how fast? Click on the "apply now" on our homepage and find out!
6 Months Out
Take a good look at your finances, both to determine what needs to be paid down and how much you can afford. If you haven't already, you'll want to start saving for your downpayment. And remember to account for a little more for closing costs, taxes, insurance, and any other unexpected moving expenses. While you're looking at how much is still owed on your credit cards, assess your credit score too.
Double-check that your taxes from years past were filed correctly and that there is a clear paper trail for recent major purchases and deposits. This is also an excellent time to get pre-approved for a mortgage. Pre-approval helps you know how much home you can truly afford, as well as lets sellers that you are a qualified home buyer.
3 Months Out
Around this time is when most buyers start shopping around for an agent. While the internet has made it easy to browse home online, a real estate agent is an expert. They're intimately familiar with the area, the local listing agents, and are skilled in negotiating the best deal on your behalf. Your real estate agent will help you to understand the process as well as what to look for in a potential home.
Sometimes the smallest details such as the street parking or items in the property's history could cause significant disruption to your home living enjoyment. Real estate agents know what questions to ask and what details to gather to make sure that you have the information you need to make an offer. This is also the time where you'll go to open houses!
Just remember to go prepared with your pre-approval letter and a savvy real estate agent.
2 Months Out
If you didn't already get pre-approved for a home loan, you'd want to do that now. Some home buyers start shopping after pre-qualifying for a loan. However, pre-qualifying should not be confused with pre-approval. Pre-qualifying is a way of getting a general idea of how much you can afford while pre-approval is where the lender has already given the green light to loan you the money.
If you had already received a pre-approval letter and it's nearing its expiration, you'll want to reapply during this time. With your pre-approval letter in hand, you'll be ready to start making offers. Although you want to consider each home carefully, time is of the essence in real estate. Along with your real estate agent, discuss the terms of the deal to determine what is a smart and competitive offer, and submit an offer as soon as you can.
You can expect a counter-offer that may propose changes to the price, closing date, or include purchase contract contingencies. You may even go back and forth a few times before coming to a final agreement. When negotiations are settled, you'll enter the closing process, which can take about 30 days. You'll be in close communication with your real estate agent, your lender, and your escrow agency during these final stages.
1 Month Out
Once the seller has accepted your offer, you'll deposit the "earnest money" into an escrow account. Once the sale of the home is complete, the money is applied toward the closing costs. You'll get a preliminary title report from an escrow company about a week after your offer is accepted, and receive the final title policy when escrow closes.
One of the last and critical steps is to schedule your home inspection. Although not always a requirement, we always encourage our borrowers to get a home inspection as it uncovers any material defects.
Also, if there's an inspection contingency, you can use the home inspection results to negotiate with the sellers to cover the costs of some of the repairs. You could also use the information to legally back out of the sale. Once all negotiations are complete, you'll sign the purchase agreement, complete the mortgage application, and book the appraisal.
1-2 Weeks Out
During these 1-2 weeks, your lender will work on the final paperwork and approval. You'll also do a final walk-through to verify that all the repairs are done as agreed upon. Closing Day On your closing day, come prepared with a government-issued ID and any other documents requested. Also, remember to bring a cashier's check for the down payment and closing costs. The only thing left to close escrow is to sign!
Congratulations -- you're now a homeowner! Or at least you could be. Contact us today to get started on your pre-approval.