Tip #1 – Pay Attention to Interest Rates
An increase in interest rate can increase the payment on your mortgage, but it has more impact than that. The more you plan to borrow, the more a change in interest rate will affect your loan, payment, and overall purchasing power. The interest rate can also affect the overall mood of the market. Changes in either direction can cause a sense of urgency in buyers and sellers alike.
Tip #2 – You Need to be Able to Afford More Than Just the Down Payment
At one time, home buyers could get away with just the down payment coming out of pocket. All other associated fees and closing costs were able to be rolled into the mortgage. But these days, lenders want buyers to not only have the down payment amount, but also their closing costs available in cash. And with some closing costs as high as 2.5% of the loan amount, this can really have an impact on how much home you can actually afford.
Tip #3 – Get Pre-Qualified Before You Start Seriously Looking for Homes
Getting pre-qualified for a home loan doesn’t guarantee you will be approved, but it is a good place to start. This is because getting pre-qualified will give you an idea of how much home you can afford. Plus, because your credit score, debt-to-income ratio, and down payment amount can have an impact on your interest rate, getting pre-qualified will give you the information you need early on in the process so you can improve your chances of getting your loan approved at the best rate possible.
Tip #4 – Do Your Due Diligence When Choosing an Agent and/or Lender
Buying a home requires a lot of research. But, your research shouldn’t be restricted to just comparing locations and properties. You also need to do your due diligence when shopping for a real estate agent as well as your lender.
When you’re buying your first home, trust in your agent and lender is paramount. So, ask those you trust for referrals to Realtors and lenders. Visit with each one and speak to them before you agree to use their services.
Tip #5 – Be Ready to Move
If you find a home you love, put in an offer and get ready to move because odds are things will progress quickly. This is especially important if you’re looking at homes priced $200,000 or less. Buyers will be jumping on these properties because with home prices rising, they’re going to want to get in early, and so should you. Good luck!
< Back to: What to Expect on Your Home Buying Journey
The Home Buying Process Demystified
The home buying process is wrought with potential pitfalls and challenges, but when done right can be relatively painless. As champions of homebuying, we’ve created this step-by-step guide to help you through the process.
Below you’ll find an overview of the home buying timeline as well as the major components of the home buying process with links to the various steps, tools, and information to educate and empower your home search, discovery and purchase.
How Long Does it Take to Buy a Home?
Your timeline may vary, but the following is a good guideline
- Preparing to Buy a Home: 3-4 weeks
- Initial Search for Ideas: 1-4 weeks
- Building a Team: 1 week (overlap initial search)
- Pre-Approval of Mortgage: 12-48 hours
- The Home Search: 4-8 weeks (depending on criteria)
- Contract-to-Close: 14-60 days
So, on average a homebuyer will spend 30-60 days shopping and 14-60 days from contract to close. For some folks, the process can be extremely quick taking as little as 30 days total, while for others, the shopping period alone can last several months.
How Much Home Can I Afford?
The first step in the home buying process is understanding if you have the resources to buy a home. This includes knowing how much home you can afford, what type of down payment and monthly mortgage payment to budget for, as well as what type of loan program you’ll use to finance your new property.
Buying a home is a complicated process that requires a good deal of research. In the course of it, there will be a number of professionals and specialists involved. Once you’ve done your homework and assessed your resources, you’ll need to assemble your team.
Assembling Your Team
After you have a good understanding of your own wants, needs, and goals, it’s time to assemble your team and begin the home search! Who should be on your team? Who you’ll need to find on your own may vary, but the key team members could be: Real estate agent (could be a RealtorTM but not all agents are), home appraiser, title company, home inspector, insurance agent and mortgage lender.
When selecting the members of this team, take the same amount of care you would in choosing a home, because these people will be working for you to help you do just that. Trust & communication are key considerations in working with your team.
Sorting Out Your Finances
With the selection of a mortgage lender comes the application for mortgage pre-approval, a task that requires collecting the necessary financial paperwork to help obtain the approval. Once obtained the clock begins ticking because many pre-approval offers have a limited life-span before they expire.
Your Home Search
While you juggle the paperwork and timelines implicit to the process, remember that your team works for you. Now your search for (and discovering) your new home begins. Research, save, view and repeat. Remember Homes.com has all the tools you need to find and keep track of your favorite properties and home shortlist.
You’ve got a mortgage pre-approval in hand and have found a property you can afford to purchase and see yourself living in. Time for a purchase offer to a listing agent or seller!
Once you receive an acceptance offer, the due-diligence period starts a timeline of checks and tasks for final mortgage approvals, appraisals, inspections, and other requirements that would be stated in the terms of the contract.
Assessment, Conditions & Negotiation
Many consider this to be the most difficult part of the home buying process as it includes, but isn’t limited to, inspection, obtaining the final loan, purchasing insurance, and the potentially arduous negotiation. In this part of the process, every member of your team will be utilized, and the more homework you have done in building your team, the smoother this part will go. Those who haven’t conducted their proper due diligence could potentially see the purchase fall apart at this point.
Closing the Deal!
A successful closing requires all of the team players to come together at the same time, with the same agenda, on the same date, with numbers and figures that match. From the start of the home search to the home inspection and closing the deal, the entire home buying process can take most homeowners about three months.