The Step By Step Guide to Buying Your First Home
We leave school knowing algebra, the causes of the Civil War, and the parts of a cell. But somehow the basics of adulting - you know, how to do your taxes, how to change a tire, how to cook something nicer than ramen noodles - get left off the curriculum.
I can't help you with separating your laundry, but I CAN give you a run-down of the step-by-step process of buying a house. Below is a complete list of everything you need to do before you can grab those keys and move in.
1. Get pre-approved for a mortgage: This must be your first step. Before you start perusing Zillow and day dreaming about paint colors, you need to know what you can afford. There are so many places to get pre-approved (your bank, your credit union, rocketmortgage.com, or a whole host of other agencies). Your lending institution will take a look at your credit score, your income, your debts, your savings, and the taxes in the area and determine an amount they are willing to lend you. This pre-approval will serve as your budget as you begin the house hunting process.
2. Meet with your realtor: Once you've gotten pre-approved, it's time to meet with your real estate agent and discuss your housing needs and wants. Your realtor will create a profile for you and begin sending you listings and making appointments for you to see homes in person.
3. Look at houses! Start going to open houses and to showings with your realtor. You'll start to get a sense of what really matters to you and what you're willing to compromise on. Make sure you're looking at the boring stuff, not just how cute the kitchen is - how old is the roof? What is the foundation like? Are there updated utilities? Is the basement dry?
4. Make an offer: When you find *the* house, let your realtor know that you'd like to make an offer. In a competitive market, you may need to offer far more than the listing price, while in a less competitive market you may go under asking. Your realtor will draw up a basic contract for you to sign, specifying the price and any contingencies.
5. Attorney approval: Congratulations! Your offer was accepted. Now your contract, signed by both you and the seller, goes to your attorneys. Your attorney has three days to send a letter approving the terms of the contract or changing the terms of the contract.
6. Home Inspection: Most likely, you have requested a home inspection as a term of your contract. A licensed inspector will go through the house, with you present, to inspect all visible components of the house - from the condition of the roof to the functioning of the plumbing. If you feel that the house is in satisfactory condition based on the report of the inspector, you will waive the inspection contingency and move on in the process. If the inspection reveals problems with the house, you can choose to back out of the contract or to negotiate repairs or a price change.
7. Loan Application: With your loan officer, you will formally apply for the loan you were pre-approved for. At this point, it is important that you're not making any major changes to your financial situation (don't quit your job or buy a car or anything!).
8. Appraisal: Your lending institution will order an appraisal of the home. The appraisal determines whether the price you and the seller have agreed upon accurately reflects the value of the home. If the appraisal is satisfactory, your lending institution can go on to approve your loan.
9. Title Search & Survey: Your attorney will do a review of the property's history, making sure that no one else has any claim to it and that you are clear to take ownership of it.
10. Closing: Your attorney will work with the seller's attorney and your lending institution to schedule a closing date. At the closing, you will sign the paperwork, make the necessary transfers of funds, and finally get your hands on those keys!