10 STEPS TO BUYING A HOME

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Step 1: Finding the Right Agent


Buying a home is one of the most significant purchases in a lifetime. It is essential to have an experienced agent in your corner, always looking out for your best interest. A buyer agent’s fiduciary responsibility is to represent the buyer and to ensure that they are protected.

After all, a seller has someone in their corner. A listing agent has an allegiance to the seller. Their goal is to get the seller top dollar for their home. There is incredible value in having someone working for YOUR best interests when buying a home.


STEP 2: PREPARE FINANCING

Mortgage lenders recommend you do not buy a home that is more than 3 to 5 times your annual household income. If you are not purchasing a home with cash, you will need a mortgage pre-approval provided by your mortgage lender. A lender will work with you to get a loan that meets your needs. Some buyers are concerned with keeping their monthly payments as low as possible, others want to make sure that their monthly payments never increase.

A mortgage requires a good credit score. You can improve your score by:

  • Paying down credit card balances.
  • Continuing to make payments on time.
  • Avoid applying for a new credit card or car loan until you have been approved.
  • Avoid making big purchases until you have been approved.
  • If possible, avoid job changes until you have been approved.

In order to make your dream of buying a home a reality, you will need to save cash for your down payment, earnest money, closing costs & home inspector.

  • A Down Payment is typically between 3.5% & 20% of the purchase price.
  • Earnest Money is money you put down to show you’re serious about purchasing a home.
    • - It’s also known as a good faith deposit.
  • Closing Costs for the buyer run between 2% & 5% of the loan, depending on the loan type.
  • A Home Inspection costs $500 to $1,000.
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STEP 3: Get Pre-approved


Being pre-approved, unlike being pre-qualified, means you've actually been approved by a lender for a specific loan amount. You will need to provide documented financial information (income, statements, assets, debt & credit reports, etc.) to be reviewed & verified by the lender.


TYPE OF LOAN CREDIT SCORE DOWN PAYMENT
VA LOAN 620 NO DOWN PAYMENT
USDA LOAN 620 NO DOWN PAYMENT
FHA LOAN 580+
500-579
3.5%
10%
203K LOAN 640 3.5%
CONVENTIONAL 97 620 3%
CONVENTIONAL LOAN 640 5-20%
QUALIFYING INCOME NON-QUALIFYING INCOME
W-2 Income/Salary Income from the lottery
Income from part-time jobs Gambling
Income from a second Job Unemployment pay
Overtime & Bonuses Single bonuses
Seasonal jobs Non-occupying co-signer income
Self-employed Income Unverifiable income
Alimony & child support (Documentation required) Income from rental properties
  • W2’s from the past 2 years
  • 3 months worth of pay-stubs
  • Bank statements (past 3 months)
  • Previous 2 years of tax returns
  • List of your debts & assets
  • Divorce decree
  • Additional income documents
  WHO QUALIFIES DOWN PAYMENT UPFRONT MORTGAGE INSURANCE MONTHLY MORTGAGE INSURANCE MINIMUM CREDIT SCORE
VA
Department of Veteran Affairs
Veterans, Personnel with honorable discharge, Reservists & National Guard, and Surviving Spouses NONE NONE NONE 580
USDA
Department of Agriculture
Someone who is buying a home in a USDA-designated rural area. NONE 2% of the loan amount. Can be rolled into loan amount. REQUIRED 640
FHA
Federal Housing Administration
Anyone who meets the minimum credit and income levels. At least 3.5% of purchase price 1.75% of loan amount REQUIRED 580-640
203K
Federal Housing Administration
Anyone who plans to purchase a fixer-upper or needs to renovate their home and meets credit & income requirements At least 3.5% of purchase price 1.75% of loan amount REQUIRED 580-640
CONVENTIONAL 97 Depending on the program, available first-time home buyers (a buyer who hasn't owned in the last three years) can put 3% down with a Conventional 97 program. Varies from 3%-20% of purchase price NONE REQUIRED 620
SELECT SMART PLUS Anyone who meets lenders credit, income & debt level requirements Varies from 3% -20%, but typically ranges from 5-20% NONE REQUIRED 620
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STEP 4: Start Home Shopping


START TOURING HOMES IN YOUR PRICE RANGE

Time to start shopping! We will take notes on all the homes we visit. It can be hard to remember all the details of each home, so take pictures or videos to help you remember each home, and review the notes you have written. Once we have found THE house for you, we will present an appropriate offer based on recent sales and current buyer activity in the area, as well as the value of the property in its current condition. Negotiations may take place after the offer is presented.


TIP

  • Stay positive! Checking houses off the list is just as important as adding new ones.
  • Take note of things you like and things you don’t.
  • Get a feel for the spaces, open closets and doors.
  • Evaluate the neighborhood and surrounding areas.

Step 5: MAKE AN OFFER

So you have found THE house! Congrats! In today’s market when the demand is higher than the amount of homes available it is important to act fast!

We will sit down and look at recent sales and current buyer activity in the area, as well as the value of the property in its present condition. Putting all this information together, we will work together to determine the price that you would like to offer.

There are some components to an offer that make it more appealing to the sellers.

  • Put Your Best Foot Forward
    • We will discuss your options and create your very best offer. Depending on the circumstances, you may have only one chance to make a good impression.

  • Put Down Earnest Deposit
    • Earnest money shows the seller you are serious.

  • Shorter Inspection Periods
    • Try shortening the inspection period to 10 days - if an inspection is available, check first!

  • Offer to Close Quickly
    • Many sellers prefer to close within 30 days.

The Seller Could

  • Accept the Offer

  • Counter-Offer
    • A counter-offer is when the seller offers you different terms.
    • **You can negotiate back and forth as many times as needed until you reach an agreement or someone chooses to walk away. 

  • Decline the Offer
    • This happens if the seller thinks your offer isn’t close enough to their expectations to further negotiate.

  • Offer is Accepted - CONGRATS!
    • You will sign the purchase agreement and you are now officially under contract! This period of time is called the contingency period. Now inspections, appraisals, or anything else built into your purchase agreement will take place.
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STEP 6: ORDER AN INSPECTION


During the inspection period, you will schedule an inspection with a reputable home inspector to do a thorough investigation of the home. Once this is complete, the inspector will provide us with a list of their findings. You can take the issues as-is or request the seller to address some or all of the findings. We will be mindful and reasonable on smaller items while being very cautious and vigilant of potentially significant issues.


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STEP 7: OBTAIN INSURANCE


Homeowners insurance is one of the most important steps in protecting yourself and your family in your new home. Make sure to shop around for the best prices/coverage.

  1. There is coverage for damage inside and out.
  2. Coverage for your personal valuables is also included.
  3. Coverage for your personal liability.
  4. It also covers fire-related liability.
  5. Check to see if your home is located in a floodplain, if so you. will need to add a flood insurance policy.
  6. It can help pay your expenses during and after an emergency.

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STEP 8: APPRAISAL ORDERED


Your lender will arrange for a third-party appraiser to provide an independent estimate of the value of the house you are buying. The appraisal lets all parties involved know that the price is fair. The loan file then moves on to the mortgage underwriter.

If approved you will receive your final commitment letter that includes the final loan terms & percentage rates.

PROPERTY TITLE SEARCH

This ensures that the seller truly owns the property and that all existing liens, loans, or judgments are disclosed.


Step 9: SCHEDULING YOUR MOVE

  • Finalize Home Mortgage
  • Schedule Home Inspection
  • Declutter! Sort through every drawer, closet, cupboard & shelf, removing items you no longer need or like. Donate or sell items that are in good condition.
  • Create an inventory of anything valuable that you plan to move.
  • Get estimates from moving companies
  • Schedule movers/moving trucks.
  • Buy/find packing materials.
  • START PACKING
  • Arrange appraisal (Lender does this)
  • Complete title search (Title company will do this)
  • Schedule time for closing.
  • Contact utility companies (water, electric, cable).
  • Change address: mailing, subscriptions, etc.
  • Minimize grocery shopping.
  • Keep on packing.
  • Obtain certified checks for closing.
  • Schedule and attend a final walkthrough.
  • Finish packing.
  • Clean
  • Pack essentials for a few nights in a new home.
  • Confirm delivery date with the moving company. Write directions to the new home, along with your cell phone number.

Step 10: CLOSING DAY

Closing is when you sign paperwork and you receive your new home’s keys! Typically, closing takes four to six weeks from when you sign the contract. During this time, purchase funds are held in escrow, where your money is held safe until the transaction is complete.

Lenders are required to provide you with a closing disclosure, at least three days before closing. This will show you what your final loan terms and closing costs will be. You will have three days to review the statement. This is done to ensure that there are no surprises at the closing table. If there is a significant discrepancy between the loan estimate and the closing disclosure, we must notify your lender and title company immediately.

We will do a final walk through the home within 24 hours of closing to check the property’s condition. This final inspection takes about an hour. We will make sure any repair work that the seller agreed to make has been done. We will be sure to:

  • Make sure all appliances are working properly
  • Run the water in all the faucets and check for any possible leaks
  • Open and close garage doors with opener
  • Flush toilets
  • Run the garbage disposal and exhaust fans

Who will be there:

  • Your agent.
  • A title company representative.
  • Your loan officer - (sometimes).

The closing typically happens at the title company. You will be signing lots of paperwork so get your writing hand warmed up! Some of the papers you will be signing include: the deed of trust, promissory note, and other documents.

  • Government-issued photo ID
  • Cashiers check to cover the remainder of the down payment, closing costs
    and pre-paids.

Congratulations! It was a lot of hard work, but you are now officially homeowners!! Time to throw a party and get to know your new neighbors!

*Your lender may have other loan options or down payment assistance programs. Programs, income qualifications, and requirements are subject to change. This information is for general informational purposes only. The Lanissa Fortner Team can not guarantee the accuracy, completeness, or relevance of the information provided.

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The information provided in this guide is intended for general informational purposes only. It is not intended as legal, financial, or professional advice.

The content within this guide is based on information available at the time of publication and may not reflect the most current legal or market developments. Real estate laws, regulations, and market conditions vary by location and are subject to change. Therefore, The Lanissa Fortner Team cannot guarantee the accuracy, completeness, or relevance of the information provided.

The Lanissa Fortner Team and its affiliates, contributors, or authors of this guide shall not be held liable for any losses, damages, or inconveniences arising from the use of or reliance on the information provided in this guide.

Please note that laws, regulations, and best practices can vary and change over time, and it is advisable to verify information from primary sources and consult with professionals before making any real estate decisions.

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