A Step by Step Guide for the 78259 Homebuyer.
Step 1. Arrange Financing
Before you start shopping for your next home, it’s a great idea to get “pre-qualified.” This informal process is offered as a free service by most mortgage lenders. You simply share a thumbnail sketch of your income, debts, and assets, and the lender estimates how much they may be willing to lend you to buy a home.
The pre-qualification is non-binding but is the first step to getting you Pre-Approved.
The single most important step in the home buying process—especially in a seller’s market—is getting pre-approved for a mortgage loan.
The lender will pull a credit report to examine your credit score, payment history, and debt-to-income ratio, among other metrics. After a thorough examination of your finances, the lender will conditionally pre-approve you in writing for a specific loan amount, which often allows the borrower to lock in a specific interest rate. This pre-approval gives you instant credibility with sellers when submitting an offer.
Down Payment, Fees & Closing Costs
You’ll need some cash reserves to buy your home, so keep these line items in mind when you start saving:
- Upfront Fees: Fees may include earnest money, option fee, and appraisal cost, as well as fees for home inspections.
- Down Payment: Many loans require a minimum down payment between 3.5 and 5 percent. However, there are plenty of mortgage programs that offer 100% financing with no money out of pocket.
- Closing Costs: When it comes time to close on your new home, there are many fees owed to lenders and other third parties. These fees are to be paid in full at the time of closing and typically account for 2 to 5 percent of the home purchase price. Your Realtor may be able to negotiate for the seller to pay closing costs on your behalf, but it’s a good idea to have extra funds available to cover them just in case.
Find your dream home.
Step 2. Find Your Home
This is where all your hard work starts to pay off and the fun begins. To help your Realtor help you, take the time to spell out exactly the kind of home you want to buy. Where is it located? How many bedrooms does it have? How many baths? What style is it? How about a swimming pool? How do you feel about HOAs? Be honest with yourself: which items are really must-haves and which are like-to-haves?
Now that you have a specific list of must-haves, your Realtor will do their best to meet them, given your budget and what’s currently on the market. He or she will generate lists of homes for you to consider and set up private showings of your favorites on your behalf.
Step 3. Make Your Offer
Once you’ve found the home of your dreams—congratulations! Now it’s time to make your best offer. Together we can come up with an appropriate offer, based on recent comparable sales, how long the house has been on the market, how motivated the sellers are, and other factors.
Step 4. Get Inspections
Great! You have an accepted offer, and the house is now under contract. Most contracts include an inspection contingency. A home inspection conducted by a qualified home inspector can help uncover hidden problems in the house that impact its value, habitability, and even its safety.
If the inspection reports include expensive repairs or maintenance items, or safety issues, the inspection clause in your contract should allow you to renegotiate the deal with the seller. You may ask the seller to reduce the selling price or fix the issues from the inspection reports before you’ll move forward to closing.
Step 5. Close the Deal
Now that you’ve agreed on a price and terms, the title company takes over and completes the final parts of the transaction. Title company representatives search public records to examine the chain of title and verify that the seller is the current and sole owner of the property, and has the legal right to sell it to you. Appropriate forms and paperwork are assembled for conveyance and settlement and an escrow officer oversees the closing of the transaction.
Looking to purchase a new home?
Our guide will help you know what to expect and choose the realtor that's right for you.