The Home Buying Process

Buying a home can be a very emotionally charged process. This is why it is important to
understand the steps involved in buying a home, as well as how to avoid common pitfalls. If you
are a first-time buyer, it is a good idea to seek the advice of a real estate broker to guide you
through the process.

What to Expect During the Home Buying Process
Before you pick a real estate agent and start scouring listings, it’s important to know what to
expect during the process. First, you’ll want to make sure that you have good credit and money
saved for a down payment.

Look for a mortgage lender that you can contact to get pre-approved. You’ll also want to
compare current mortgage rates to ensure that you’re getting the lowest rate possible.
You’ll need to talk to a lender or broker to determine how much home you can afford. That way,
you’re only looking at homes within your price range. Some home builders work with local
lenders to help buyers get into a new property with incentives and closing cost assistance, too.
Now is also a great time to write down your list of must-haves. Think about the location of your
new home, features that are important to you, and what you can live without to help narrow
down your choices.

Saving for a Down Payment
Virtually every type of mortgage requires some form of down payment, with only a few specific
exceptions. You’ll need to make sure that you have ample cash saved before you start the home
buying process.

If you want to avoid paying PMI (Private Mortgage Insurance) every month, most loans require a
down payment of 20% or more. Not only will having a decent down payment help you avoid
PMI, but your mortgage balance will be lower, too.
Look for ways you can cut costs and create a separate savings account. Put as much money into
this account as possible until you’ve reached your home down payment goal.
Conventional loans (via Fannie Mae and Freddie Mac) only require a 3 percent down payment.
Some government loan programs like VA and USDA loans have no down payment requirement.

Hire a Real Estate Agent

Once you find a lender and you’ve saved for a down payment, it’s time to find a professional real
estate agent. Your agent will help you look at houses and walk you through the contract process
when you’re ready to make an offer.
Make sure that you choose an agent who is familiar with your market and the local area. They
will be your ally throughout the home buying process and serve as the “middle man” between
yourself and the seller’s agent.

The agent is also responsible for helping you negotiate the price and will help you make an offer
via contract to the seller. For example, if you find some issues during the home inspection
process, your real estate agent can help you ask for a lower price.
It’s also important to understand more about property value and what it means. A knowledgeable
agent understands which homes are worth the asking price, and which ones you might want to
walk away from.

Understanding Closing Costs
So you’ve secured financing, have your down payment ready, and you’ve found a new home
with your agent that you want to buy. Now it’s time to wait for the closing day so you can get the
keys to your beautiful new house.

Part of the costs of buying a home is the closing costs. You’ll receive a closing disclosure from
your lender three business days before the closing date.
The closing disclosure shows you all of the important financial details. These details will include
your total monthly payment, the loan term, your interest rate, loan fees, and the bottom line that
you’ll need to bring with you for closing.
It’s important to go over this paperwork carefully in case you notice any discrepancies. On the
day of the closing, you’ll be there to sign the final paperwork, and your real estate agent or an
attorney may also attend.

When you close on a home, a title and escrow company will receive the money and transfer it
accordingly. After all the paperwork is signed, you’ll get your keys to your new home!
Remember these key takeaways as you’re going through the home buying process. With a good
team, a great lender, and some perseverance, you’ll be able to secure the new home of your