The Buying Process for First-Time Homebuyers

The first time buying a home is an emotional, exciting, and also exhausting
experience. You may also be wondering along the way what am I missing?
This is a common question. Here's how the buying process works from
start to finish:

• Do some preliminary online searching. Check into
  what homes are selling for in the areas you're interested in to give you
  an idea of what you're looking for. This will help later on when
  communicating your wish list with your real estate agent.
• Budget. Use an online mortgage calculator to
  determine what your monthly mortgage payment would be if you were to
  purchase one of these homes you've found online. Make some additional
  estimates for utilities and see if this fits into your budget. Fannie
  Mae recommends buyers plan to spend less than 28% of their total income
  on housing.
• Get pre-approved. To get pre-approved for a
  mortgage you'll need to get some paperwork ready: pay stubs, W-2s, bank
  account statements, tax returns for the past two years, credit
  lines, and names and addresses of your landlords for the past two years.
  Start with your current bank, but make sure you check out competitor
  banks as well as you might get a better mortgage loan rate by shopping
  around. Also, consider the amount your lender approves you for as a
  maximum as this is by no means what you should spend.
• Save your pennies. At least 3-5% to be precise.
  Many first-time homebuyer programs offer minimum down payments as low
  as 3% to 5% (vs. the standard 20%), and a few require no down payment at
  all.
• Find an agent. A good real estate agent will help
  you navigate the process every step of the way. Your friends and family
  will be great sources to see if any of your trusted contacts have someone
  they recommend.
• Look at homes. Be patient at this stage. Your real
  estate agent may show you a variety of homes to get your reaction on
  features they think you'll like. Give your agent detailed feedback so
  they can show you homes that are perfectly suited to you. Sometimes,
  this process can take months or years. So be patient. Also, make sure you
  let friends and family know you're looking for a new home so you may even
  find out about an amazing home before it hits the market.
• Make an offer. Once you've found your dream
  home, you may want to move quickly. Your agent will guide you on a
  reasonable first offer to start negotiations based on market conditions.
  Also, make sure you consider closing costs which could account for 2-5%
  of the home price.
• Negotiations. Prepare to go back and forth with
  the seller a few times on price and selling conditions. Your real estate
  agent will be your advocate here and try to get you, their client, as
  much as possible for your money while being fair and respectful to the
  seller and their real estate agent.
• An accepted offer. Pop the champagne! If you reach
  an agreement, you'll make a deposit to an escrow account to show
  good faith. Escrow is usually 30 days where the seller takes the house
  off the market with the contractual expectation that you'll purchase the
  house provided you don't find any serious problems during the
  inspection.
• Do a home inspection. Even if the home appears to
  be flawless, there's no substitute for having a professional inspector
  review the property for quality, safety, and general condition of your
  potential home. You don't want to be surprised with a home that
  needs a lot of unexpected repairs. If the inspection reveals undisclosed
  serious defects, you can negotiate further to have the seller make
  repairs or discount the selling price. You'll also likely have the
  option to withdraw your offer and get your deposit money back.
• Closing. When your negotiations with the seller
  are successful, and the inspection comes back clean, you should be ready
  to close. At your closing, you will spend a little over an hour signing
  lots of paperwork and then receive the keys to your new home.
• Moving out of your home and into your new one. This is a busy and exciting time! Have fun!

If you're ready to buy but aren't sure how to get started, check out some more homebuyer tips on the blog and reach out to your local real estate pro for guidance when you're ready to get the ball rolling.