What to Expect During the Home buying Process

With “one-click ordering,” online shopping has spoiled us. If only purchasing a home were this straightforward. Many people enter the situation unprepared and attempt to figure it out as they go. We’ve been in a similar position.

From our first home, which was little more than a cottage but seemed like a huge leap of faith at the time, to our current urban loft with a view, we have made mistakes. However, this is optional. Let us explain the home-buying process to you in detail.

How do I even start?

In addition to determining your housing requirements, establishing a budget, getting your financial ducks in a row, and obtaining preapproval, which is a lot to do, you’ll also need to have a clear idea of what you’re looking for. A wish list is a useful tool. Among the potential factors to consider:

• What part of town do you want to live in?
• Are schools a factor?
• Older home, or newer?
• One story or two? Condo?
• Contemporary or traditional? Something else entirely?
• A fixer-upper or move-in-ready?
• Near public transportation or other amenities?
• How many bedrooms? Bathrooms?
• Yard? Fenced?

These are just a beginning. You’ll have a much longer list once you start brainstorming.

Do I have enough money?

You understand the concept of a down payment. However, there are additional costs you’ll need to account for prior to or at the loan closing, including:

• Earnest money, a deposit you’ll make to the seller upon signing the sales contract to show your good faith.
• Closing costs, listed in an official Loan Estimate, including an appraisal, credit report, loan origination fees, home insurance premiums, property taxes (often prorated at closing), title insurance, recording fees and attorney’s fees.
• An initial deposit to your monthly payment escrow account (if one is to be established).

Three days prior to the scheduled closing of your loan, you will receive a Closing Disclosure detailing all fees. You may compare these particulars to the Loan Estimate you received three days after submitting your application. Expect to pay approximately 3 percent of the home’s purchase price in closing costs.

Depending on the competitiveness of your housing market, a seller may sometimes agree to pay some or all of the closing costs. In addition, some lenders will allow you to roll the fees into your mortgage (known as lender credits), but you will pay interest on what could have been a one-time fee. Lender credits, also known as “rebate pricing,” may also increase your interest rate.

Do I need a real estate agent?

A real estate agent is aware of what is selling and at what price, as well as the neighborhoods that are in demand or overpriced and the locations of homes that are within your price range. A real estate agent will also know how long a house has been on the market, which is not always available online and can affect the home’s price and strengthen your negotiating position.

However, the vast majority of real estate agents work for the seller, as the commission is paid by the seller and is only triggered upon a sale. Therefore, if possible, you should seek out an exclusive buyer’s agent. They are difficult to locate. Nevertheless, state real estate licensing laws typically require all types of agents to conduct themselves in a fair and ethical manner.

How long will this take?

According to a survey conducted by the National Association of Realtors, in order to find a home you’re willing to make an offer on, you’ll likely view 10 homes over a 10-week period. Approximately half of those surveyed indicated that finding the “perfect” home was the most challenging aspect, but there is still much to do.

Contract to closing typically takes between 30 and 45 days, excluding the time you’ll spend getting preapproved for a mortgage and house hunting. Typically, the duration of a contract cannot exceed sixty days. Included are the following steps:

1. Negotiating and submitting an offer (1-5 days)
2. Signing a sales contract (1-3 days)
3. Securing your financing (21-30 days, sometimes more)
4. Having a home inspection completed (7-10 days)

After the contract has been accepted, you have little control over the situation. Occasionally, delays can be caused by hiccups along the way. If you are required to sign an authorization or respond to a request, do so as quickly as possible, and then wait patiently.

Managing expectations

Buying a home, particularly for the first time, is likely to leave you feeling overwhelmed with information. At nearly every meeting, you will be given “helpful” guides, informational pamphlets, and legally required disclosures. Our goal is to limit your home-buying experience to as few surprises as possible, which is why we are simplifying everything for you.