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How to navigate the homebuying process

The homebuying process is one of the most exciting, involved projects that you can take on, whether solo or with a family. There are many stop and go moments that you will encounter, often with both highs and lows, so it’s important to be prepared and knowledgeable at each step.

What you can expect during the homebuying process

Homebuying can be a big financial and emotional commitment. You’ll likely be spending a lot of your time in your new space, making memories for years to come. Thinking about what you want, down to the smallest of details, is an important part of the homebuying process. This helps you determine what is and isn’t negotiable for you.

Before you start house hunting, make sure you're aligned on what you’re looking for. This can help determine your approach to the home buying process.

Here are some questions to ask yourself before starting the homebuying process:

  • What can I afford?
  • What do my savings look like?
  • How long do I plan to live here?
  • What neighborhood do I want to be in?
  • What type of home do I want? (condo, apartment, house etc.)
  • How much upkeep do I want to be responsible for?
  • What features are non-negotiable for me?
  • Am I willing to buy a fixer-upper?

Remember, the homebuying process is a balancing act between what is realistic for you and what will make you happy in the long-term.

How to prepare for buying a home

The homebuying process starts with evaluating your needs and wants. Is it time to move into a more permanent space or invest in the spot you’ve always dreamed of? Once you’ve determined your needs and wants, there are a few things to prep before you can own your home. Getting your savings in a good spot, getting documents and paperwork in order and determining how you will move forward are some things to check off in this process.

Homebuying tips and checklist

  1. Check on and build up your credit score
  2. Continue or start saving money
  3. Determine what you can afford
  4. Make a list of your non-negotiables
  5. Find a lender
  6. Get prequalified for a loan
  7. Build your homebuying team
  8. Start looking at homes
  9. Make an offer
  10. Get a home inspection
  11. Home appraisal
  12. Close on home
  13. Move into your home

Apply and prequalify for a mortgage

Before starting the homebuying journey, try to be clear on how much you can afford and, if you're able to, get prequalified for a mortgage.

Getting prequalified for a mortgage means giving your lender a look at your finances so they can assess whether you’ll be able to pay back a loan. Prequalification can help you better focus your home search based on price, and may help you stand out from other buyers who aren’t prequalified.

To be sure you're getting the best deal, talk with multiple lenders and compare their mortgage interest rates and loan options see types of mortgages.

With prequalification, the loan officer will ask for information about your income, job, monthly bills, amount you have available for a down payment, and possibly some other information. They will then provide you with an estimate. Once the seller has accepted your offer, you can move forward with completing the mortgage process.

You can apply for your loan in four easy steps:

  1. File an application with your lender of choice
  2. The lender will send you a Loan Estimate, which includes info about the costs and terms of the loan.
  3. Review the estimate to make sure you understand and agree with everything you see.
  4. If you’re happy with the terms, notify your Home Lending Advisor and proceed with the application.

Finding your home

Finding your perfect home, whether it’s through a real estate agent or online, can be a linear or nonlinear process. You may start with a real estate agent but end up finding a place on your own and vice versa. This could involve meeting a lot of sellers and going on many home tours.

Make an offer

Making an offer can take time. You’ll want to assess what kind of offer is appropriate based on the seller’s asking price and consider what contingencies you’ll want to include. Depending on the current market and your needs, you may want to make an offer lower than the asking price in order to leave room for negotiation.

You may be set on buying a house and offer what the seller is asking to cut out the back and forth as well. The seller will either decline, counter or accept your offer. This process can be short or there can be a bit of back and forth.

Home inspection

A home inspection is an examination of the property after making an offer, but before you sign on to buying the house. This is a crucial step because it may uncover hidden problems with the home. Your realtor could have a home inspector to recommend. If not, you can easily find someone in your area. Once the home inspection is done, you can determine how you want to move forward.

Home appraisal

Your lender will order an appraisal. The appraiser determines the market value of the property by assessing the condition of the home and its curb appeal, as well as by reviewing recent sales prices of comparable homes in the area. In some instances, the property may be listed for more than the appraised value. If this occurs, talk to your Real Estate Agent about your options.

Closing on the home

Congratulations — you've made it to the final step! Closing on a home usually means a final walk through of the house and signing a lot of legal documents. Take a close look during the walk through to make sure any items that needed to be addressed were taken care of.

Once all the necessary legal documents have been signed and closing costs have been paid, the ownership will be legally transferred to you. Making it through the home buying process is extremely rewarding but it's important to pay close attention to the steps along the way.

Parts of the home buying process to look out for

The homebuying process may take time. Although there are important milestones to hit along the way, you will be able to take them on with the right strategy.

Saving money

A crucial part of the homebuying process is saving up for it. You'll want to estimate of how much money will be required upfront. Once you’ve figured this out, you may start mapping out how you can put this amount of money aside.

The typical upfront costs are the down payment, inspection fees, appraisal feels and closing costs. There may be more or less, depending on your situation. If you don’t already have one, you may want to consider setting up a personal savings account that could help you save for your dream home.

Selling your current home

In some instances, buying a home may mean selling your current property. This can be a bit more challenging because you’re participating in two transactions at once. Some people tackle this by selling their current home before buying another. One thing to consider is that one of the deals may fall through, so you may sell before you’re able to buy or vice versa.

Credit score

It’s helpful to have your credit score in a good place — otherwise, this may affect your chances of getting the mortgage you want. If you can pay off any outstanding balances or debt in advance, this could improve your score. Buyers with higher credit scores tend to secure loans with a lower interest rate.

Location is key

Finding what you need and what you can afford in a desired location is a balancing act. Some buyers secure a house in their desired location by finding a smaller more affordable home. Others buy their ideal home and compromise on location. Another strategy is buying a fixer-upper and improving it over time, potentially resulting in additional costs along the way.

You can do it

Navigating the homebuying process can be tricky and time consuming, but nothing you can’t handle. Doing everything you can in advance to save money and prepare can help make your journey the smoothest one possible.

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