Buying a home doesn’t have to be a stressful process. We understand that this is one of the biggest financial decisions of your life, and we’re here to help make it all go smoothly for you.
Follow these 9 actionable steps to make your move as stress-free as possible. A quick note: The following steps may not always occur in this exact order – this guide is meant to give you an overview of the home buying process. Many small steps can fall in between, so it pays to connect with a local lender early!
1. Get Pre-Approved
Pre-qualification vs. pre-approval
You may see these two terms used interchangeably, but there is a difference:
A pre-qualification occurs when a loan officer reviews your credit (soft pull) and information you provide about your income, debt, and assets. Your loan officer then gives you an idea of the loan size you may qualify for. A pre-qualification is strictly informational, and its purpose is to quickly help you get an idea of your budget when home shopping.
A pre-approval, on the other hand, means your file is fully underwritten. At Granite Bank, we offer the Granite Green Light pre-approval program, where our underwriting team fully underwrites your file before you find a property. We review everything except for the property and title, so you can shop for homes with confidence and show sellers you’re serious. Your pre-approval letter is your ticket to making the process smoother and faster.
Benefits of getting pre-approved:
- Budget clarity: Knowing your budget upfront will allow you to focus on homes within your financial comfort zone and not waste your time on homes that don’t fit your budget.
- Negotiation edge: Sellers take pre-approved buyers seriously, which amplifies your negotiating power.
- Peace of mind: House hunting is easier and more enjoyable when you know exactly where you stand budget-wise.
- Faster closing: A pre-approval can streamline the closing process, helping you move into your new home sooner.
- Quick response to market opportunities: Being pre-approved means you can act quickly when you find the right property, giving you an advantage in fast-moving markets.
2. Get an Agent
Why do you need an agent?
- You’ll have an expert guide to your local market.
- You’ll save time.
- You’ll get a better price.
- You’ll have access to all the listings.
How do you choose an agent?
- Ask friends and family who have gone through the home buying process for a referral
- Read reviews online for agents in your area
- Interview a few agents and choose the right one for you.
- Ask about their experience and if they’ve sold many homes in the areas you’re looking in.
3. Go House Hunting
Now for the fun part—finding your new home! With that being said, that are important factors to consider and steps to take, such as:
- Location. We’ve all heard that old saying, but it’s a popular saying for a reason—it’s true. Consider how the schools rank in that district, neighborhood amenities, and commuting distance to work.
- The home’s condition. Some questions to ask—
- Has the home been tested for radon? Radon is colorless and odorless, but exposure can be deadly. That’s why it’s so important to ask if the home has been tested.
- How old is the roof? Roof replacement can cost between $5,000-$10,000 and beyond, so you need to know the roof’s age before you buy the home.
- Do the appliances come with the home? If not, you’ll have to set aside more room for them in your budget.
- Property taxes and HOA fees. You’ll want to know how much the property taxes and HOA fees (if any) cost so you get the full picture of expenses for your budget.
- Document your impressions. Keep detailed notes and take pictures during your house visits to help you recall your preferences and dislikes.
Before committing to an offer:
Before making a significant commitment, conduct thorough due diligence. Prior to signing a contract, you’ll want to do the following:
- Check zoning and development. Research proposed zoning changes and upcoming developments with local municipalities.
- Consult neighbors. Engage with neighbors to gain insights on traffic noise, flooding risks, and both positive and negative aspects of the area.
- Assess property infrastructure. Ask about the age of crucial components (AC/ HVAC units, furnace, water heater, roof) and any past foundation work.
- Understand market dynamics. Determine the current market conditions and review comparable sales (comps) in the neighborhood.
4. Make an Offer
Once you’ve found “the one,” you and your agent will put in an offer.
Though the homebuying process can be an emotional time, try to maintain a business mindset when putting in an offer. Remember that a real estate purchase contract is a legally binding document. Follow these steps to protect yourself and strengthen your offer:
- Define Transaction Details. Specify details, such as closing date, repairs to be completed by the seller, and closing costs to be covered by the seller.
- Support Your Offer. Include a copy of your pre-approval letter from your lender. Demonstrate commitment by having earnest money ready to showcase your seriousness about purchasing the home.
5. Secure Your Mortgage
Once you have an accepted offer, it’s time to finalize your financing. If you’ve gotten pre-approved, a lot of your information has already been reviewed. But now it’s time to make the approval official. Here’s what you need to do:
Submit Your Loan Application
You’ll need to fill out the official loan application, otherwise known as the 1003. You’ll need the following information when applying for a mortgage:
RESIDENCY
- Addresses from past two years with dates of residency
- Landlord/management company’s information (if renting)
EMPLOYMENT/INCOME
- Employer’s information from past two years with dates of employment
- Two most recent pay stubs
- Two most recent W-2s*
- Most recent retirement, Social Security, or disability income (if applicable)
- Two most recent and complete bank statements
- Two most recent and complete tax returns*
*Self-employed borrowers may need to provide additional documentation, such as current balance sheet.
ADDITIONAL INFORMATION
- A copy of each borrower’s valid photo ID
- Divorce papers (if applicable)
- Bankruptcy papers including discharge (if applicable)
Review your disclosures
After you submit your loan application, your lender will send you your disclosure packet within 3 business days. You’ll want to review the documents and pay special attention to your Loan Estimate. This is the document that has your loan amount, term, monthly payment, and closing costs. You’ll want to review it for accuracy, and when you’re satisfied, sign the documents and return them to your lender.
6. Property Inspection and Appraisal
A property inspection isn’t required for a mortgage, but it can provide crucial information about the home’s condition. You’ll want to get one for peace of mind. An inspector checks for possible hidden damage and structural and safety issues in the home.
An appraisal, on the other hand, is required for most mortgages and determines the fair market value of the home.
7. Insurance
You will need to get homeowner’s insurance and flood insurance, if required.
8. Closing
You’re almost done! The first closing document you’ll receive is your Closing Disclosure (CD). Please review it carefully and make sure that the terms are what you’ve agreed to. Once everything is squared away, you’ll set your closing date, time, and location for the final paperwork.
9. Get Your Keys!
Congrats, you did it! Now, how will you celebrate?
FAQ About Buying a Home
- How long does it take? The timetable will vary. On average, it takes between 30-45 days. However, it can take longer, or shorter, depending on circumstances.
- How much money do I need for a down payment? It depends on what type of mortgage you get. Conventional loans can require as little as 3% down payment while FHA requires 3.5%. Additionally, VA loans do not require a down payment.
- Can I buy a home a sell my home at the same time? Yes! A trusted realtor and lender can help you do this.
Some Homebuying Do’s and Don’ts
DO’S
- Obtain pre-approval to strengthen your offer.
- Provide comprehensive and truthful information on your application.
- Continue to make timely payments on your rent or mortgage, loans, and credit cards.
- Maintain your current employment and income, and promptly inform your LO of any changes.
- Keep important documents readily available (W-2s, tax returns, and pay stubs.)
DON’TS
- Make significant purchases (furniture, cars, boats, etc.)
- Apply for new credit accounts, close existing accounts, or co-sign loans for others.
- Deposit large sums of cash into your bank account outside of your regular paycheck.
- Spend your down payment or closing cost funds.
- Plan a vacation
Final Thoughts
The home buying process doesn’t have to be stressful. With a great agent and lender, your process will be seamless and as stress-free as possible.
