The process of purchasing a home as a first-time home buyer can be an exciting and overwhelming experience. It's a significant financial decision, and it's essential to understand the steps involved in the process. The guidance and support of an experienced real estate broker can be extremely valuable throughout the home-buying process.
Mortgage Pre-Approval: The first step in the process is obtaining a mortgage pre-approval. This involves retaining the services of a loan officer to determine how much you can spend on a home and obtaining a pre-approval letter. This will give you a better idea of what homes you can afford and make the home search process much easier.
Retain an experienced real estate professional: Once you have your pre-approval in hand, it’s time to retain a real estate professional. It’s important to note that the seller pays the commission for the real estate agent, so as a buyer, you do not need to worry about these costs. Your real estate agent will help guide you through the next steps, which involve deciding on your home specifications. This includes the type of home, location, size, number of bedrooms and bathrooms, schools, and any other features that are important to you, such as a yard or pool.
Home Search: After determining your home specifications, it’s time to start your home search. This can involve searching online listings or having your real estate agent find off-market homes. Once you have a list of potential homes to visit, your real estate agent can schedule showings and view homes with you.
Negotiations: When you have found the right home, you will need to make an offer. A skilled real estate agent can also help you determine a fair price for the property based on market conditions, comparable properties, and any additional factors that may impact the value of the home. Your agent will use their expertise to reach an agreement with the seller.
Inspections: If your offer is accepted, you’ll move on to the executed contract phase. Your real estate agent will prepare a list of all important deadlines, and you’ll move on to the inspection process. This involves a general inspection that the buyer has to pay for, as well as pest inspection, and any additional inspections such as roof, HVAC, plumbing, stucco, and foundation.
Negotiate repairs: If the inspection uncovers any necessary repairs, you’ll need to negotiate with the seller to have them completed or to receive compensation for them. The buyer will obtain the survey and pay for it to ensure the property's boundaries and details. Lenders will also obtain an appraisal.
Appraisal: The appraisal report provides a detailed analysis of the property's value, including an explanation of how the appraiser arrived at their conclusion. The appraisal is important because it helps lenders determine how much money they are willing to lend to a borrower to purchase the property, and it also gives buyers and sellers a clear understanding of the property's worth.
Pre-Closing: Pre-closing involves obtaining homeowner and flood insurance, changing utilities to your name, scheduling movers, submitting a change of address with the post office, performing a walk-through of the property, reviewing closing documents, and wiring transfer funds or obtaining a cashier’s check.
Closing: Finally, the closing process involves signing all the necessary paperwork and transferring ownership of the property. After closing, it’s important to re-key locks, change your driver’s license, and file for a homestead exemption.
Buyer’s expenses: It is essential to consider the expenses that the buyer incurs, including loan costs such as property insurance, property taxes, appraisal, and down payment. The buyer must also provide an earnest money deposit, which usually amounts to 1% of the sales price, an option fee, with a variable cost of $250 or more, survey costs, which can reach $400 or higher, and pay for inspections that may cost several hundred dollars, depending on the number and size of inspections required.
Overall, the home buying process can be a lot to navigate, but with the help of an experienced real estate agent, it can be a much smoother experience. Taking the time to understand each step in the process and the associated expenses can help first-time home buyers feel more confident and prepared.
