As we welcome the new year, it’s a time of many new beginnings. Whether you have vowed to keep a simple resolution or to make a serious life change, the new year offers the opportunity to start over or try something totally new.
Thanks to the thriving real estate and lending market in the Mid-South area, we are helping many customers buy their first home. With mortgage rates still low, it is a great time to invest in a home of your own.
Especially for those who are buying a home for the first time, it is important to have a real estate agent and agency represent you to navigate the process and keep you feeling confident throughout it.
What Are the Steps to Buying a Home?
Your 10-Step Guide
So you have decided to purchase your first home. Congratulations! This is a big step, and we would be thrilled to help.
Buying a house is exciting but may also be intimidating. You may know exactly what you want, and be excited to house hunt to find the right place. Since the housing market is so active here, your hunt can take unexpected turns and take longer than you expected.
To help you move the home-buying process along, we have assembled a checklist of things to do, think about, and research. We are available to offer our guidance and help you determine what is best. Simply contact us today to get started. To begin, let’s review the checklist below.Now is a great time to set goals to become a homeowner.
1. Check Your Finances
One important aspect of home ownership is financial. You will need money for a down payment, for closing costs, and for ‘after-purchase’ expenses.
Although not a requirement, if you have a down payment equal to 20% of the purchase price, your lender will not require you to pay Private Mortgage Insurance. This will reduce your monthly costs. However, if you do not have a down payment equal to 20% of the purchase price, you may still be able to purchase a home.
In addition to the down payment, it is important to have a nest egg to cover costs after you move in. You may want to purchase new furniture and appliances You may want to make additional improvements such as fencing, landscaping, and interior remodeling projects. Having additional funds will enable you to enhance your home ownership.
2. Meet with a Home Loan Officer
Finding a lender for your home is very important. Securing a loan at a good rate for the desired length of time affects how much money you pay for your home over time.
You may already have a relationship with a bank that offers home loans. If not, there are a number of great local mortgage lenders who provide terrific customer service. And some provide special loan programs for medical professionals and others who meet specific criteria.
Determining your mortgage options and financing ability is an important first step. Lenders will look at your savings, income, and debts to determine what amount of money is financially feasible for your home purchase. With the assistance of a loan officer, you can decide how much you want to spend on your home and the resulting financial impact on your future.
You may benefit by consulting with your real estate agent regarding reputable mortgage lenders.
3. Make Your Wish List
This step is where many buyers start. It is easy to daydream, but it is important to consider the numbers from the beginning.
First, think about who you are and who you want to become. What is the size of your family now? And in the next few years? Do you enjoy nightlife, dining, and fun events? Are you active, or do you prefer to stay low key?
The home you buy should support your lifestyle now and in the foreseeable future. You may want a larger home with open areas and a yard. Or, if your home requirements are simpler, a condo may be a better fitl.
Buyers sometimes buy a home that is different than they initially expected. You may think you want a giant yard, a pool, or even a fixer-upper. You may initially think you want a historic home. You may then, as you view homes, change your criteria and priorities. Obviously it is better to make adjustments before you purchase your home rather than afterwards.
Another important aspect of homebuying is the neighborhood. The Memphis area offers many different types of neighborhoods. Each offers distinct benefits and amenities. Check out our Mid-South neighborhood guide, to get a sense of the different areas.
The best way to get a feel for a neighborhood is to visit it. Go at different times of day. Talk with people in the neighborhood; ask what they love, or don’t love. Doing on-the-ground research can give the best insight.
4. Talk to Your Real Estate Agent
The earlier you bring your agent into the process, the more value your agent can add to your purchase. Remember, your qualified, experienced agent can help you find the home which most closely meets your criteria.
Yes, there are popular real estate websites. But your real estate agent has a better pulse on the market and more accurate information than these websites. The information real estate agents provide is important; what may be even more important is their guidance in interpreting this information.
5. Tour Homes
Much like visiting neighborhoods, touring homes is important as you refine your wishes, needs, and requirements. Being in a home may be very different than viewing it online.
Visiting a potential home enables you to imagine daily life here. Is there good natural light? Does it have a personality you like? Are there things you can easily change to make it a better fit? A clear definition of your absolute needs and your ideal issues, coupled with an open mind, enhance your search process.
Few buyers find their home as quickly and easily as they expected. Most buyers look at more homes than they anticipated. Sometimes, buyers go back to homes they previously rejected because subsequent viewings caused them to adjust their perceptions, needs, and requirements.
6. Find Your Home, Make an Offer
You find your home and are ready to make an offer. The process is complex; but your process will benefit with the expertise of your Realtor.
Since our area is both affordable and rich with amenities, new listings often receive a number of offers within hours. Your Realtor can help you make an educated decision, move efficiently, and make a reasonable offer.
Your Realtor is qualified to help you expedite the offer process if that is in your best interest. Or, if you choose a home that has been for sale for quite awhile, your Realtor can help you make an offer that takes this into account.
Negotiations can be complex, stressful, and frustrating. If you are hunting in a popular area, be prepared for competing offers and bidding wars. With the help of an experienced agent, you reduce your stress and rely on your Realtor to represent your interests.
7. Have the Home Inspected
One you have the home under contract, you will want to have it inspected. A certified home inspector will examine many of the components of the home which will affect your quality of life after you close and take possession.
The general home inspector will look at the visible components which will affect your use of the home, including the foundation, the roof, the attic and/or basement, the electrical system, the plumbing, the heating/air conditioning, and more. A thorough inspection can make you aware of any defects that might affect your satisfaction of the home.
Armed with an inspection report, your Realtor can help you negotiate repairs which are to be made by the seller prior to your closing.
Also, the inspection can educate you regarding issues that are not defect, but which may cause problems in the future. This allows you to keep plans for future expenses and budget accordingly.
There may be additional, specific inspections which are important. These might include a termite inspection, pool inspection, irrigation inspection, etc.
8. Have the Home Appraised and Get Insurance
You will want an appraisal to make sure your purchase price is reasonable. Your lender will require the appraisal to make sure they are not lending you more money than the home is worth. Your lender will order the appraisal, and you will pay for it.
You and your lender want the appraisal value to be greater than the price you have agreed to pay. Also important: the appraisal determines the amount of money the lender will loan you for your purchase.
Your lender will require you to maintain homeowner’s insurance, which protects both you and the lender. Your lender may require that the first year of the homeowner’s insurance be paid when you close on your purchase.
The property taxes on the home will be prorated when you close. The seller will pay the taxes, which are due as of the closing date, and you will be responsible to pay for the taxes beginning on the closing date. Your lender may require you to pay a portion of your homeowner’s insurance and property taxes each month with you mortgage payment.
9. Work with the Bank and Your Real Estate Agent for Closing
After the contract is in place, the inspections are complete, the repairs are agreed to, and the appraisal is completed, the parties can all proceed to closing.
You and your agent will be in communication with the lender. You will transfer funds for your down payment and transaction fees from your bank to your closing attorney prior to the closing date. Your lender may require a variety of additional information and documentation as they process your loan.
It is important to keep in mind the closing will only occur when the lender is fully committed to lend you the money. You and your real estate agent can help expedite this process by providing the information and documentation required by your lender.
10. Sign the Papers and Get the Keys
You are in the home stretch! The final step is signing the legal papers for closing. Prior to closing, unless other arrangements have been made, all repairs will have been made. Any other terms and conditions of the contract will have been met.
You, with the help of your real estate agent if you wish, have identified a real estate attorney to process your closing. You and the seller will each sign closing documents which will transfer the deed to you.
On closing day, you will review and sign all legal and mortgage documents with the guidance of your closing attorney. The seller will also close with their chosen attorney. Once both buyers and sellers have signed documents and the lender has funded the loan, the attorneys for the buyers and sellers will swap the money for the deed. At this time, the home will legally be yours!
Congratulations! You’ve done it! Now you can move in, unpack, and enjoy life in your own home!
Take the Steps Toward Home Ownership Today
We hope this checklist enlightens you as you begin the home shopping adventure. While it can feel overwhelming, it is quite simple with a great Realtor at your side.
If you’re ready to talk about your plans to buy a new home, call us today! We are passionate about our hometown, and we can’t wait to find the perfect place for you.