As a First-Timer or Veteran, the home buying/selling experience can feel overwhelming and present many unknowns. As your Real Estate guides, we want to make this process as easy as possible for you, and us! With over 50 years of team experience, we have encountered many different processes- some were easy and others…extremely challenging!
We have created a chart to summarize the home buying and selling processes, hopefully making them much simpler to understand. Here at Alliance, it is our goal to educate and inform so that our clients walk away from the process with a new home and a whole lot more knowledge! Please remember that all home buying/selling journeys will differ, due to a lot of dynamic elements. The chart and brief explanations will provide a general overview, giving you more confidence through this experience. Feel free to reach out to the Alliance Team to connect and ask any questions!
Home- Buying Process
1. Check your credit and save for home-buying costs.
One of the first steps to ensuring your financial readiness to purchase a home is to review your financial history and your current income. This is a good place to start, as it will guide you towards your next steps. If you are unsure about how to access & assess your credit, please move to step 2!
A downpayment is a form of deposit that you will make towards the purchase of your house. In most cases, this amount can range from $0 to 20% of the total cost of the home, depending on your funding source. Please note that there are several types of funding that you can use toward the purchase of your home including, but not limited to: home buyer programs, mortgage loans (FHA, conventional, VA, USDA, rehab loans), and cash.
It is also important to note that there are additional costs associated with buying a home including but not limited to- earnest money, inspections, appraisal fees, & closing costs. As mentioned before, it is good to have money saved even if you have the opportunity to take advantage of home buyer grants and programs.
2. Receive a Pre-approval for a mortgage loan.
Your next step is to meet with a mortgage loan officer. You can choose a bank, credit union, or mortgage lender company. We always encourage our clients to do their own research and compare the benefits of each of these paths. Need help? Alliance can refer you to our network of mortgage loan professionals.
A pre-approval letter is provided by a loan officer to inform sellers that you are a ready, willing, & able buyer. In today's competitive market, it is best to have this letter before submitting an offer. A loan officer will use your financial history, current income, and assets to determine how much you will be able to afford for a monthly mortgage payment; ultimately serving as a blueprint for your home search. This process will also determine which loan is the best option for you.
3. Work with an Agent to find a house.
Let’s be honest, this was probably your first step! Once you know how much you can afford to pay for your new home & the type of features you would like to have, the search is on! At Alliance, we work to tailor a game plan based on the needs of our clients to provide the best
service. This includes your agent sending you homes within your criteria via email and taking you to see homes.
This is the fun part, yet can also be the most frustrating. Ensure that you inform your real estate agent of any changes in your search and to always be honest about things that you do/do not like! Honesty is the best policy, especially for one of the biggest purchases of your life. We’re here to serve you!
Once you find a home you love, it is time to make an offer!
4. Submit an offer, Negotiate, & Get offer accepted!
An offer is simply letting the seller know that you are interested in the home and you would like to buy it. Your agent will guide you through completing a real estate sales contract & sign disclosures to submit to the seller. There are many elements that can make a good offer- talk to your agent to determine your best options! During this time the seller-side may make a counter-offer and it’s time to negotiate!
Tip: This is why it is extremely important to have your pre-approval letter before looking for houses, you should stay ready so that you don’t have to get ready! The time it takes for you to get a pre-approval after finding a home, could be the time that the seller chooses another offer. In real estate, time is money!!
Real Estate is currently in a seller’s market, meaning that there are more buyers than sellers, so homes are hot commodities and they move fast. So if you are interested in buying a home, let your agent know ASAP!!
Your offer was accepted!! Next step, deposit your earnest money.
5. Deliver Earnest Money
Earnest Money is a form of deposit that you will pay to the seller to show good faith and seriousness to buy a home, after the contract is accepted and signed by all parties. This is usually a payment of 1% to 2% of the purchase price and is applied to your down payment or closing costs.
This payment will be paid up to 3 days, or time stated in the contract, after the contract was accepted. The money will be held in Escrow throughout the remainder of the home buying process. Your agent will guide you on the details to deliver the funds to the seller-side.
Earnest money is delivered and received, what do you have to do now?
6. Complete an *inspection and *appraisal
Your agent will set up the home inspection for many reasons. There may have been some things about the house that you noticed during your showing that needed to be repaired or updated. It is in your best financial interest to have a professional go through the home and
ensure that it is safe and all vital parts are up-to-date. Also, some loans require you to have an inspection in order to satisfy loan requirements. During this time, you may be able to negotiate more terms to your benefit.
The appraisal is required to determine the value of the home, to satisfy loan requirements, & to ensure that the home is worth what you are paying.
The inspection and appraisal are upfront costs that you will pay, as it is for your benefit and necessity. Inspections can range from $300 to $500. Appraisals can range from $300 to $600. In both cases the payment is usually due at the time of service. Your agent can choose the inspector and the appraiser is sent by your bank.
Now that the inspection and appraisal has passed, are we done yet?!
7. Complete mortgage loan process with a loan officer
This is the longest part of home buying, a 15-45 day process, but you are almost to the finish line! You will submit the remainder of any documentation that is required by your loan officer. Your agent will support you through this process and keep you updated with any changes on the seller’s side.
All of the documents will go to the Mortgage Underwriter and you are now waiting to receive a "Clear to Close", which says that all loan requirements are met.
8. Closing Day: Sign documents & Get the keys!
*Whew* You made it to Closing Day! Today is the day that you officially become a “Home-owner”. The property is transferred to you, and your payment is transferred to the seller. On this day you will sign documentation, & pay your down payment and closing costs. Your agent will be with you to provide assistance and support!
You made it through the home-buying process! Please remember that not all processes are the same and that there may be other elements to the process that you may encounter along the way. What we do know is that the Alliance Team can educate, guide, & support you through this journey.