How do I start the homebuying process?

Deciding to buy a home, or at least considering it, is a huge step. Buying a home is not like buying a pair of shoes; it is far more complicated and will involve the expertise of several qualified specialists. The first two specialists you will need are a REALTOR and a loan officer. You may ask friends, family, and work associates for recommendations.  But first, make sure your finances are in order. Check your credit score; and if you need to improve it take the necessary steps. Your banker can assist you if you don’t know your credit score or don’t know how to improve it. While your loan officer will ultimately help you determine how much home you can afford, you can use an affordability calculator to get a general idea. Also, you will need to have money available for your down payment and closing costs. If you have not already set money aside for your home purchase, now is the time to do so. Choosing a qualified REALTOR is of critical importance to your buying process and ultimately your satisfaction with and enjoyment of your home. Choosing a qualified lender is important both to the smooth process of buying and to your long-term home ownership.

What is the difference between a real estate agent and a REALTOR®?

A REALTOR® is an individual who is a member of the National Association of REALTORS® (NAR).  This means that real estate agents, property managers, and professional appraisers may also have the title of REALTOR®.  A real estate agent is a general term for someone who has completed real estate school and has passed an official exam that covers real estate standards and practices. NAR reports that only half of all real estate professionals in the nation are certified as REALTORS®. One difference that sets REALTORS® apart is that they must abide by an enforceable set of ethical guidelines and they are sworn to uphold certain professional standards.  Our REALTORS® are also members of the Memphis Area Association of REALTORS® (MAAR) and to the Tennessee Association of REALTORS (TAR).  The mission and purpose of NAR, MAAR, and TAR are to protect you, the consumer. REALTORS adhere to a strict set of rules and regulations to assure you receive ethical, professional representation. 

How do I select a REALTOR®?

There are a couple of ways to find the right REALTOR® for you.  You may ask friends, family, and business colleagues if they have been represented by an agent with whom they had a great experience.  We advise that if you’re buying (or selling) a home, you pick an experienced agent who can provide sound advice throughout the process based on their knowledge and experience.

Whether you find your REALTOR by recommendation or by online research, you may be best served to interview them before engaging them to represent you. Ideally, they should have a number of years of experience as a full-time agent. Also, you want to have a sense of trust and ease regarding communication. It is important that they want to listen to you and hear your wishes, concerns, and opinions. 

As a cautionary note: many people are familiar with Realtor.com, Zillow, Trulia, and other commercial websites and each of those will connect you with REALTORS. The REALTORS they connect you with have usually paid a fee to the company to receive referrals. The REALTORS are not necessarily credentialed or experienced. 

As a side note, many buyers who identify a house that piques their interest on one of these websites will select ‘contact agent’ expecting to reach the listing agent. However, again, the REALTOR who contacts the buyer has usually paid a fee to receive such referrals and in some cases has never seen the home and may be completely unfamiliar with it.

SEE MORE: Our Agents →

How long does it take to buy a home?

The answer to this question varies widely and depends on many different factors.  The biggest unknown is how long it will take you to find the home you want. In recent years, due to a limited number of homes for sale, buyers have often searched for several months before finding a home they want and successfully putting it under contract. Once you find the home you want to purchase, with the assistance and guidance of your REALTOR, you may be able to complete the contract preparation/submission/negotiation in a day or two; or, it may take longer depending on many circumstances. 

A normal length of time to complete a home purchase is typically 30-45 days from the time when the contract is complete. The closing process has a number of mandatory steps accomplished by an array of specialists. So take that into account if you’re working against a deadline, such as a lease that’s about to expire or a home you’ve agreed to vacate.  Once you’re under contract, there are still many tasks for both parties to complete, so don’t get caught off guard. 

It’s also important to remember that, unlike rent, your first mortgage payment is due ‘in arrears’. At closing, you will pay the mortgage cost for the remainder of the month in which you closed. Your first mortgage payment will be due on the first day of the month following your first full month of ownership. For example, if you close on your home on August 15, at that time you will pay for the mortgage cost for the remainder of August. Then, your mortgage payment for September will be due on October 1st. If you’re working against a deadline like a lease, this can help you avoid paying both rent and mortgage in the same month, even if you are technically a resident of both homes. 

How much does it cost to buy a home?

This can vary greatly depending on the cost of the house, the property taxes, the interest rate on your loan, and other variables. First-time home buyers should be prepared to pay for a few things out of pocket, including:

• Home inspection fee, termite inspection fee, and perhaps additional fees for sewer line inspection, pool inspection, and/or irrigation system inspection: so depending on the size and complexity you will want to budget at least $500 for inspections and you may spend more depending on the number of inspections.

• Appraisal fee, generally between $250 and $600

• Earnest money, typically between 1% and 3% of a home’s purchase price, but could be higher or lower

• Loan origination, credit report, and other fees are necessary to obtain your loan.

• Your pro-rata share of the property taxes beginning on your date of purchase.

• Appraisal gap, determined during the offer process and by the appraisal value

• Closing costs, generally an additional 2% to 5% of your home’s purchase price

LEARN MORE: A Guide to the Home Buying Process

What kind of assistance is available for first-time homebuyers?

The most popular assistance for first-time buyers is an FHA loan.  This loan is insured by the Federal Housing Administration (FHA) and can offer down payments as low as 3.5%. These loans are especially popular with first-time buyers who may not have saved enough for a large down payment and out-of-pocket closing costs. FHA provides mortgage options with lower requirements than traditional lenders and can help those with questionable or minimal credit history and low credit scores secure a mortgage. 

Depending on your financial position, job history, or veteran status, you may be eligible for this or other home-buying assistance programs. 

LEARN MORE: Assistance Programs In Your State →