An Overview of the Homebuying Process

For first-time home purchasers, the homebuying process can be complicated, confusing and sometimes frustrating.  To assist you and ease your way through this adventure, we have designed this road map, along with a discussion of different aspects of the home purchase.

While each buyer’s individual situation affects his or her homebuying process differently, most home purchases involve four stages:

• Preparation & planning
• Research and review information
• Shopping for the right property
• Negotiate and close your purchase

This guide remains applicable if you are buying a new construction home from a developer or building a custom home with a private contractor. It is designed to help you save money and time throughout the entire homebuying process, from finding the top mortgage brokers to finding the right real estate attorney.

Preparation & Planning

Buying a home, especially your first home, entails a great deal of energy, time, emotions and money for most consumers.  Before you begin this journey, you should take the time to prepare yourself for the process.

Within this preparation and planning stage, we recommend seven steps that every homebuyer should follow.  The seven steps below link to more detailed articles:

1. Understand who’s who in the homebuying process
2. Consider the pros and cons of homeownership
3. Prequalify yourself to determine how much you can afford
4. Determine how much money you will need
5. Consider your down payment requirements
6. Calculate how much you want to spend
7. Prepare required personal financial documents

It goes without saying that adequate preparation will save you time, aggravation and money; and this is especially true of buying a home.

Research & Review Information

Before you begin shopping, take some time to learn more about the real estate and mortgage loan industry.  The six articles listed below discuss specific elements involved with mortgage loans and real estate.

1. Dissecting the monthly payments
2. Insurance requirements to consider
3. How escrow accounts work
4. Down payment options
5. Tax deductions for you
6. Planning a budget

Shopping for the Right Property

If, after considerable thought and preparation, you have decided to continue pursuing this homebuying adventure, it is time to find the right property for you.  The home-shopping stage normally entails the following four steps:

1. Consult a loan officer to get pre-approved for a loan
2. Determine your home-shopping preferences and tactics
3. Contact a real estate agent to obtain and visit property listings
4. Consult a real estate attorney for direction

Shopping for the right home may take one day or six months.  It all depends on the market, your preferences, luck and timing.  It is important to remember, however, that you control your timing—even if it seems otherwise.  This will probably be one of the most expensive investment of your life: you must take your time and do it carefully.

Negotiate and Close Your Purchase

Once you have selected a property, you will need to begin negotiations and preparations to close the transaction.  For new or unsure homebuyers, this stage can be especially challenging.  Luckily, help is available from the buyer’s agent, loan officer and attorney.

Preparations for the closing essentially revolve around finalizing the mortgage financing and contractual details for the purchase.  Moving from selecting a property to closing the transaction normally entails the following steps:

1. Buyer and seller negotiate price and terms
2. Conduct a professional inspection of the property
3. Complete the processing and final approval of the loan.
4. Prepare and execute closing
5. Move-in and post-closing considerations

You Are Not Alone

Because of the vast sums of money involved within the residential real estate industry, many institutions and agents will be assisting you during every stage of the process — if you let them.

As a homebuyer, you have several agents working for and with you to protect your rights, as well as speed the homebuying process.  These individuals normally include your attorney, real estate agent and local mortgage lender.

In addition, you should be able to count on some help and information from your chosen property inspector, insurance agent and tax preparer.  Many property owners often turn to tax preparers or accountants to help them with properly claiming their applicable mortgage and real estate deductions.

The government also has several agencies available to assist homebuyers with their home buying questions, comments and complaints.  Each state maintains a regulatory office charged with the responsibility of supervising the real estate and lending industry.  In addition, many larger municipalities operate affordable housing and homebuyer resources.

The Department of Housing and Urban Development (HUD), Fannie Mae and Freddie Mac offices also provide consumer assistance information on everything about home buying.

Complaints about discriminatory practices should be directed to the nearest Federal Trade Commission, which operates the Equal Credit Opportunity office.  Complaints about possible fraud should be directed to the state regulatory agency for the suspect agent.  Comments and complaints about the quality of service received should be directed first to the manager or owner of the subject company.

 

Go to next HomeBuyer Guide chapter:  Who’s Who in the Real Estate Industry