Home Buying 101: What to expect at each step
What Should I Expect When Buying a Home?
- You can’t have it all. What are your compromises?
- Your down payment is just the start. Understand ALL the cost involved.
- Do you need your own agent? You might need a top buyer’s agent of your own.
- Don’t be left homeless! A lot happens between finding and moving
Don’t you wish home buying was as easy as seeing a house that you love online, adding it to your virtual cart and paying for it with a couple of clicks? Buying stuff online has spoiled us with hassle-free purchases that can be made anytime the mood strikes. If only buying a house were so easy. A lot of people stumble into the whole thing and try to figure it out as they go.
Whether you are buying your first home, or you are a home buying veteran but it’s been a while since your last purchase, DIGGS has your back.
How do I even start?
Besides determining what your housing needs are, setting a budget, getting your financial ducks in a row and obtaining a pre-approval — which is a lot to do — you’ll also want a firm idea of just what it is you’re looking for. A wish list can be a good tool. Among the potential considerations:
- What part of town do you want to live in?
- Are schools a factor?
- Older home, or newer?
- One story or two? Condo?
- Contemporary or traditional? Something else entirely?
- A fixer-upper or move-in-ready?
- Near public transportation or other amenities?
- How many bedrooms? Bathrooms?
- Yard? Fenced?
These are just a beginning. You’ll have a much longer list once you start brainstorming. If there is another decision maker in the picture (like a spouse or partner) make sure that you are both on the same page, and figure out what each of you is willing to compromise on. Having these conversations before one of you falls in love with a place the other hates is essential for a smooth home buying process.
Got enough money?
You know about making a down payment, but home buying comes with other expenses due before or at closing that you’ll want to prepare for, such as:
- Earnest money, a deposit you’ll make to the seller upon signing the sales contract to show your good faith. Typically this is 3% of the purchase price, but that may change depending on individual circumstances.
- Closing costs, listed in an official Loan Estimate, including an appraisal, credit report, loan origination fees, home insurance premiums, property taxes (often prorated at closing), title insurance, recording fees and attorney’s fees.
- An initial deposit to your monthly payment escrow account (if one is to be established).
You will receive a Closing Disclosure regarding the total charges three days before your scheduled loan closing. You can compare these details with the Loan Estimate you received three days after your application was made. Expect to pay roughly 3% of the home’s purchase price in closing fees.
Sometimes a seller will agree to pay some, or all, of the closing costs, depending on how competitive your housing market is. Plus, some lenders will allow you to roll the fees into your mortgage (called lender credits) — but then you’ll be paying interest on what could have been a one-time charge. Lender credits, or “rebate pricing,” may also cause the interest rate you pay to be higher.
Do I need a real estate agent?
You might think that if you read enough helpful articles (like this one), you can go it alone and then have the listing agent write up your contract. That’s how you’ll get the best deal, right? A top buyer’s agent can help you avoid the most common mistakes buyers can make and will only consider your interests when negotiating a deal. The seller’s agent has a fiduciary responsibility to the seller, and while they may be able to act in a fair and ethical manner representing you and the seller, you shouldn’t have to wonder who they are really working for when they give you advice. For more about this, here is a great video from Kendyl that breaks down when you can go it alone in a transaction.
Can I get into a place before my lease is up?
You’ll likely view about 10 homes over 10 weeks to find a home you’re willing to make an offer on, according to a survey by the National Association of Realtors. And that’s just the beginning. Finding the “right” home can be the most difficult part of the home buying process, but there’s still a lot to be done once you have found “the one”.
The entire process from contract to closing (not counting the time you’ll spend getting preapproved for a loan and house hunting) will normally take from 30 to 45 days. A contract timeline is usually no longer than 60 days. Some of the steps involved include:
- Negotiating and submitting an offer (1-5 days)
- Signing a sales contract (1-3 days)
- Securing your financing (21-30 days, sometimes more)
- Having a home inspection completed (7-10 days)
After the contract is accepted, timing is mostly out of your hands. You will be given an estimated date of closing when you open escrow, but this date is not set in stone. Any hitches along the way can sometimes delay the process. If you need to sign an authorization or respond to a request, do it as quickly as you can (after reading it over carefully of course) — and then just wait patiently.
Buying a home, especially the first time around, can leave you with information overload. At practically every meeting you’ll be given “helpful” guides, informational booklets and legally required disclosures. That’s why we’re boiling it all down for you — our goal is to limit your homebuying experience to as few surprises as possible.