Understanding the Home Buying Process Step by Step
Congratulations! It’s an exciting decision that you’ve made to begin the home buying process & I’m so happy to have the opportunity to work with you! I’ll lead you through each step along the way but here’s an overview of what you can expect from submitting an offer to signing a Purchase & Sales Agreement to getting to the closing table! Rest assured that I will be with you each step of the way.
I am here to help!
Please remember that I am always available to chat, so feel free to ask any questions that may arise–reach me by email, phone, or text.
Step One: Get Preapproved by a lender
I’m excited to begin looking at houses with you but first let’s make sure you understand your budget—what you’re actually approved for & what you feel comfortable paying per month for your mortgage. I have carefully vetted the lenders that I trust will offer you the best rate & the best customer service. Lender Contacts
It’s important that you understand your budget—I know, that’s not something a lot of us like to think about. But rather than focusing on an arbitrary number that you pick as your purchase price, I advise that you focus on the total monthly mortgage amount that you can comfortably afford. What do I mean by that—rather than saying I’m looking for a home that is $250k or less focus on the monthly mortgage payment because in each community that $250k may equate to a different monthly mortgage payment depending upon the property taxes. Here’s an explainer video I made to help you to understand how to use a Mortgage Calculator. Your lender can also help you to understand how.
Step Two: Set up your Home search & start looking at houses
Zillow/Trulia/Realtor.com/etc are all syndicate sites populated by the Multiple Listing Site (MLS). As a Realtor, I pay monthly dues that allow me to access the dashboard of the MLS. It’s also where agents post listings. All of this info is what “feeds” Zillow & all of the other sites. As part of my access, I will set up a “portal” for your home search with your specific criteria: price range & location are the most common settings but I can get as detailed as you’d like. When a home in your set criteria becomes available you will immediately receive an email with the listing details–this is important, in a market where certain price points sell very quickly we need to set up showings immediately.
Another useful feature of your Portal is that only homes that are still available will show up–homes that are already under contract will no longer be on the map. Much of what you see on Zillow is already under contract which can be really frustrating! You & I will work together to set & adjust your criteria. When you see a property that interests you, send me an email or text, along with your availability to see it, & I will set up a showing as soon as possible. I will also regularly look through MLS to see if a property that I think might work for you stands out to me as well as stay tuned in to my network for upcoming listings.
Step Three: We found a house that you love! Now let’s submit an Offer!
We may have to look at dozens of homes or maybe just a few–but when the right one comes along we’ll submit an offer.
Here is an example of what the offer form looks like: Sample Offer
Along with the signed offer, we will also need to submit the following:
Preapproval from your lender:
I will request an updated preapproval from your lender
Offer Deposit:
Your offer package must include a deposit check–the physical check or a photo copy will also do. I will need a copy of a personal check in the amount of $500 paid to the order of the listing brokerage. Generally a photo copy (you can text me a photo) is all that is initially needed until the offer is accepted by the seller. Note that this is only the offer deposit and is only a small amount. If the offer is accepted we will sign a Purchase & Sales Agreement which will require the full escrow deposit==> more on that in a few!
==>A Note About The Tools That I Utilize For My Clients: Authentic-Sign & DotLoop
In real estate there are a lot of forms that have to be signed. In order to simplify our process I utilize a platform called Authentic-Sign, or another that’s called DotLoop, for electronic signatures. I’ll set up a portal for you & you’ll receive an email with a link to sign needed documents. It’s simple, fast, & free!
Step Four: Our offer has been accepted, Sign the Purchase & Sales Agreement
Congratulations! We made it through the negotiations & we’re on our way to making this house your home! Along with the Purchase & Sales Agreement (P&S) there are additional forms that we will sign. You will also submit the deposit–generally 3-5% of the purchase price. These funds are held in an escrow account by the listing brokerage & will be credited towards your down payment or closing costs at the closing. If you decide to terminate the agreement (the inspections reveal a deal breaker for example) your escrowed funds will be returned as long as we’re within the terms of the contract—I will go through the contract with you, in person, line by line so that you are fully informed & understand the terms. I also have a legal team that will be available to you at any time to answer questions.
Step Five: Schedule Home Inspections
As per the P&S: buyers have 10 business days to have any & all inspections (a general Home Inspection includes a visual inspection of all major structural & mechanical elements of the house, a separate provider would have to be scheduled for a lead test, a separate provider for a water test, etc). Here is an example of the report.
This is Important==> the buyer can back out of the contract for any reason based upon any findings resulting from an inspection without explanation to the seller. Again, you have 10 business days to contact the seller regarding any inspection findings. Day 1 begins on the date of the last signature on the P&S–weekends & holidays are not counted.
Expect the price of a Structural/Mechanical Inspection to be in the range of $450-$700 depending upon the square footage of the property.
If the home has a septic system &/or well water you may need a separate inspector
This may very well be the best money you could possibly spend so please do not skimp on the inspection or downplay its importance!
Expect that the inspection will take 2-3 hours depending upon the size & condition of the home. I will be with you at the home inspection.
I have vetted resources for these inspections that I can refer you to, I will also attend the inspections & help you to understand the reports & make the decisions about how to best move forward based upon the findings.
You can choose any inspector that you prefer–they don’t have to be on my list– if you use a different company please let me know in case I have had prior experience with them & *absolutely* ONLY use an inspection company that utilizes a program that has pictures in the report. This is a must. I’ve relented on this a few times & it’s been a regret each time.
Step Six: The Final Countdown
We don’t move onto the next phase until the home inspections are complete & we decide to continue to move forward with this property. Once any repair requests or price changes have been negotiated & signed I’ll notify your lender that we’ve finalized any changes to the contract & she/he will order the appraisal of the property. Your loan will move into the final stages & the underwriter will review all of the final documents. The appraisal takes about a week to get turned into the lender once the appraiser has been to the property. We’re now waiting for the under writer of the loan to give the final green light.
Order the Appraisal through your lender
Now that the inspection is completed & we know that you are moving forward with the purchase it’s time for the Lender to order the appraisal. In most cases this is a cost that you’ll pay upfront although in some cases you may be able to include the appraisal fee in your closing costs–you should discuss this with your lender. The appraisal costs around $500-700.
Home Owners Insurance Binder
Following the inspection, you will also need to reach out to a few insurance providers to secure your policy binder. I will send you my preferred vendors & discuss your options. The insurance agent will work with your lender & attorney to make sure that the policy is paid for–generally at the closing by the attorney on your behalf although in some cases you may need to pay for the first year upfront—please discuss this with your lender so that you know what to expect. Single family properties average $1200 per year, multi family properties $2-3k depending on the number of units. You need the insurance binder in place in order to obtain the Mortgage Commitment Letter.
The Mortgage Commitment Letter
We will be waiting on the lender to submit the Mortgage Commitment letter by the stated deadline on the P&S. This is a very important deadline & I will stay in contact with the lender to make sure if more time is needed that we file the appropriate extension. I’ll encourage you to follow my lead & put this in your calendar as a date reminder.
Clear To Close
Once the commitment letter is issued there are a few additional steps the loan processor takes before she/he sends us the coveted “Clear to close” email. The closing will be scheduled & the closing documents will be emailed to you. We will also schedule the final walk through of the property.
Final walk through
We will schedule this to occur the day before the closing or about an hour before the closing–whatever works best for you. The walk through is quick & should only take about 15-20 minutes, it serves to make sure that there are no unexpected surprises before the property is officially yours (leaks, leftover items, missing appliances, etc).
The Closing
You will sign a large stack of papers & you will leave with the keys to your new home!
What to bring:
Valid driver’s license or passport
A certified bank check in the final amount as determined by your closing attorney (you may not get this final number until the day before–that is not uncommon). Do not bring a personal check for this amount, it will not be accepted.
Final Thoughts….
I understand that buying a house is a monumental occasion in your life! It’s a BIG DEAL!!! And it’s a major purchase. I don’t take this for granted. You can count on me. I’ll be here each step of the way!