Here are the main steps to buying a home.
Step 1: Prepare Your Finances
- As soon as you start thinking about buying a new home you should check your credit report to make sure it is accurate.
- Hire a Lender (please call me for recommendations if you don’t have one).
- Determine your budget (generally, your mortgage should be no more than 25% of your take home pay).
- Get a pre-approval letter (this will help in negotiations and will also let you know how much home you can afford).
- Gather initial documents needed for the loan application: drivers license, paystubs for the past 30 days & YTD, 2 years tax returns and W2s, and 60 days worth of bank statements.
Step 2: Research
- Hire a Realtor (I hope it’s me)!
- Your Realtor will provide you with information on neighborhoods, home values, market trends, financing options, and the home buying process in general – AT NO COST TO YOU!!!!
- At this point you should start thinking about your “must haves” so your Realtor can start emailing you homes that meet your criteria. Ask your Realtor to set up an MLS Portal for you, so you have access to all of the homes in the MLS that meet your criteria as they hit the market.
- During the research stage you should start driving neighborhoods to determine the best location for your family (taking into account work commute, social activities, shopping, dining, etc.)
Step 3: Go Shopping (this is the fun part)!
- Let your Realtor know which homes you are interested in seeing… keep in mind that many homeowners require 24 notice for appointments.
- Drive by the homes you are interested in at different times of the day to make sure there are no surprises with traffic patterns or noise levels.
- Take plenty of notes and pictures of the homes you view. Notate what you like, didn’t like, and what you would have to change.
- When you find “the one”, make an offer! Your Realtor will provide comps of similar homes in the area that have sold, are pending and that are listed.
- Your Realtor will negotiate with the Listing Agent until both parties come to an agreement. After all parties sign, you are under contract!
- In most cases, you have 3 days to get the earnest money to your Realtor (who will take it to the Title Company that will handle the transaction). 1-3% of the sales price is the average amount for earnest money.
Step 4: Fill out Mortgage Application
- Once you are under contract, you have 5 days to get your application complete with your lender (that is why it’s important to gather all of your financial documents before you start looking for a home).
Step 5: Shop for Homeowners Insurance
- Once your mortgage application has been approved, you should start shopping for homeowners insurance.
- Note in Florida… insurance companies will not secure a policy if there is a named storm, so you should try to secure your insurance as soon as possible.
- At this point, the insurance company may ask for an elevation certificate for the home you are purchasing – your Realtor can help you get this document.
Step 6: Get a Home Inspection
- You will want to hire a home inspector to make sure you know of any issues with the property.
- A Wind Mitigation may be required from your insurance company for certain discounts. Your Realtor can help get that too!
- If any major issues are identified, your Realtor will negotiate with the Seller on whether they will be repaired, or if a price concession will be provided.
Step 7: Get Title Insurance Commitment
- The title company will do a search on the property to ensure it has a clear title and that the seller has the right to sell it.
Step 8: Get a Home Appraisal
- Once you have had a successful home inspection, your lender will order a Home Appraisal.
- If the home doesn’t appraise at the sales price, your Realtor will once again negotiate for you. If the home is going to be financed, the home must appraise for at least the loan amount or the lender will not approve.
Step 8: Order Survey
- Around 10 days prior to closing the title company will order a survey to ensure the there are no encroachments on the property (like a neighbors fence being on your soon-to-be-bought property).
Step 9: Closing
- Your Realtor and title company will coordinate a closing time that will work for all parties.
- You should do a walk through of the property you are purchasing either the day of or the day before closing to make sure it is in the same condition it was in when you signed the contract.
- Finally, it’s time to CELEBRATE!!!