Homebuying Process

There are a number of steps in the homebuying process. It is important to understand the process and how the steps fit together.

This post will give a high-level overview, and then we will explore some of the steps in more depth in future posts.

It is important to know that some of the steps can be done in a different order and the list is not completely exhaustive, but this is more of a general way to think about the process.

1. Are you financially ready?

Before proceeding with buying a home, it is very important to look at your finances and determine if you are ready to buy. We will cover this in more depth in a future post, but some things to consider:

• Do you have any high-interest debt, such as credit cards?

• Do you have any emergency savings?

• Is your income stable?

• Have you been saving for a down-payment?

2. Make a budget

After considering if you are financially ready, it is a good idea to make a clear budget for the purchase:

• How much will you put toward a down-payment?

• How much will you keep for closings costs?

• How much will you keep in reserves?

• How much are you willing to pay monthly? It is important to consider the mortgage payment, as well as insurance, taxes, utilities, HOA, etc.

After considering these factors, you will arrive at a range of home prices you want to pay.

It is important to keep in mind the difference between what you can afford vs. what you want to pay. Just because you can qualify for a larger mortgage, doesn’t mean you should, as this may make you "house-poor" for an extended period of time.

3. Special programs

Along with step 2, there are special programs available to help homebuyers depending on your income and circumstances. There will be a future post about this.

4. Decide on type of mortgage

You will want to decide the type of mortgage you want to get. It could be part of a special program or not. There will be a future post dedicated to the different types or mortgages.

5. Preapproved for a mortgage

Getting pre-approved for a mortgage will allow you to shop for a home with confidence. If you are thinking through your finances conservatively (steps 1 and 2), it is very likely that you will qualify for a larger mortgage than you have decided on.

6. Find an agent

Find a real estate agent that can assist you in the homebuying process. I believe that is it best to think about the financial aspects of your purchase separate from the agent. You do not want your agent becoming your financial advisor.

7. Find a house

Find a house that you like.

8. Offer

Your agent will help you make an offer. There are many details to this, that we won’t go into here.

9. Apply for mortgage

You will want to formally apply for the mortgage you already got pre-approved for.

10. Inspection

The home will be inspected for any issues. The lender will likely require an inspection, but even if they didn’t you still want to be sure there are no significant problems with your major purchase.

11. Appraisal

Lenders will require an appraisal, so they feel confident about what the home is worth.

12. Insurance

You will need homeowner’s insurance. Premiums will typically be included with your mortgage payment.

13. Closing

The closing process officially transfers ownership of the property.

If you have any comments, questions, or ideas for future posts, please let me know

I hope you found this post helpful and educational. If you have any comments, questions, or ideas for future posts, please let me know. You can reach me directly via email at crawford@ulmerfinancial.com.