10 Steps in the Homebuying Process
Buying a home is one of the biggest financial decisions you'll ever make. While the process can feel overwhelming, understanding what to expect at each stage can help you move forward with confidence. Whether you're purchasing your first home or your next one, taking the time to prepare before you begin shopping can save time, reduce stress and help you make informed decisions.
Here are 10 key steps to help guide you through your homebuying journey.
1. Get Your Own "House" in Order
Before you start to dream of paint samples and new furniture, you need to evaluate and understand your credit standing. There are many options for obtaining a free credit report such as AnnualCreditReport.com, so make sure in advance you have no “surprises” that may impact your ability to get a loan prior to entering a contract to buy a house. Your credit history will be a major factor in whether you qualify for a mortgage and what the terms of that mortgage are.
Make sure you are aware of the type of score you receive on a report, as many free or pay to obtain sites are not giving you the score used by a lender. Scores used for homebuying, financing a vehicle and credit cards all use different criteria and can vary.
In addition to reviewing your credit, take time to determine a housing budget that works for you. Rather than focusing on a specific home price, consider how much you are comfortable paying each month for your mortgage and other housing-related expenses, such as property taxes, insurance, maintenance and utilities. Establishing a monthly budget can help you stay focused on homes that fit your financial goals and avoid stretching beyond what feels comfortable.
2. Choose Your Lender
Unless you are in a situation where you can make an all-cash offer on a house, having a pre-qualification or pre-approval letter from a lender is a requirement to be considered a prospective buyer. You should shop around for a lender, as programs, loan costs and rates can vary. A loan officer should guide you through the options available and help you find the best fit for your budget and homeownership goals. Depending on the lender and your eligibility, you may qualify for programs requiring little or no down payment, including Georgia United's 100% financing options*. Above all else, make sure your lender is responsive to your questions, communicates clearly and takes the time to help you understand your options so you can make confident financial decisions.
3. Get Pre-approved
A pre-qualification is not a guarantee you can get a loan since it is only based on the information you provide when applying. A pre-approval entails a much more thorough review of your finances, credit history, job history and demonstrates a greater degree of certainty to a seller.
While either option as outlined above will provide the maximum amount you are able to borrow, you should determine what you are comfortable paying each month. Many people are surprised to learn how much they qualify for, but keep in mind a lender only looks at the monthly payment in terms of the cost for the monthly principal portion of the loan, the monthly interest on the loan, property taxes, property insurance and any homeowners association fees typically. This is known as PITIA.
Once you are pre-approved, keep in mind that you should not open any type of new credit until the loan is closed and the house you choose is yours. Lenders monitor credit throughout the course of the loan process, so inquiries for credit cards or furniture may jeopardize your final loan approval.
4. Choose a Real Estate Agent
It can be very helpful having a licensed Realtor® to guide you through the homebuying process. Having an experienced agent who understands your wants, needs and desired location can be invaluable throughout the homebuying process. They can help identify opportunities, keep you informed of new listings and guide you through negotiations and important decisions along the way.
Buying a home is a team effort. Once you've chosen your real estate agent and lender, introduce them so they can collaborate on your behalf and help simplify the process.
5. House Hunting
After going through your wants and needs with your Realtor – which should cover everything from location, type of home, size, bedroom and bathroom count, age of home and condition to name a few – they should provide a list of homes that may meet some if not all of your criteria. Determining what is truly important is key, as the ideal home isn’t always the perfect home, so knowing ahead of time what items are negotiable is good to keep in mind.
During your search pay close attention to the details, if you notice something that seems out of the ordinary or want more information, speak up. Visit a home during different times of day, under different weather conditions, to truly see what it is you are getting. There are no returns when it comes to buying a home.
6. The Offer
Once you have determined which home best fits your needs, your Realtor will help you to make a fair offer. Market conditions can influence how you structure your offer. Depending on the level of competition, you may have room to negotiate, request that the seller help with closing costs or submit your strongest offer to improve your chances of being selected.
In the offer you will determine a closing date, contingency dates for certain items to get completed (like a home inspection, financing and appraisal) and how much earnest money is put down, which is basically a good faith deposit. If you have a home to sell before buying a new one, that too would be incorporated into this offer.
It's important to remember that an offer is a legally binding contract. Before signing, make sure you understand the terms, timelines and financial obligations involved. A trusted Realtor and lender can help you navigate the details and make informed decisions with confidence.
7. Get a Home Inspection
While not a requirement for the loan, you should get a home inspection before buying any property. An inspector who is familiar with both past and present building codes will look for problems from the foundation to the roof and everything in between. This covers the electrical systems, heating and air systems, appliances and structure of the house itself.
Your Realtor or lender should be able to recommend options, but it is important to utilize an inspector who is familiar with the area and local building codes in which the property exists.
8. Finalize Your Loan
Once the contract is signed and provided to your lender, the loan process truly begins. You may need to update information already provided such as pay stubs, tax returns and bank statements which will be provided for final review.
- The appraisal is ordered to verify if the price you agreed to pay is in line with the current market value of homes that sold before your impending purchase.
- Title work is ordered by a law office which will identify the chain of title to ensure there is nothing that can jeopardize your clear ownership of the property once the sale takes place.
- You will need to obtain and finalize a homeowners insurance policy on your new home which is also provided to the lender for review.
It typically can take 30 days or more to finalize the loan depending on the complexity of your loan and market conditions.
9. The Loan Closing
Upon final approval, and as you near the agreed upon contract closing date, you will receive a Closing Disclosure which like the original Loan Estimate will outline all the costs associated with your new home purchase as well as the final monthly payment information. This form must be provided three days prior to closing and you must acknowledge receipt of it, so pay close attention!
On the day of closing, you will most likely go to a settlement agent or closing attorney who will oversee the signing of documents and where at the end of the signing they will hand you your set of new keys so you too can post on social media that you are a new homeowner!
10. Move In
While it is the last step in the process, you should begin to research moving companies and establish your utilities for power, heating and air, internet, etc. in advance of the closing date so that when you do walk over the threshold of your new home, you can truly settle in and create lasting memories from day one!
Thinking about buying a home or still have questions? Our team is here to help—no pressure. Connect with a Georgia United mortgage expert.
Content provided for informational purposes only and should not be interpreted as legal advice on any subject matter.
*Loan amount cannot exceed the fair market value of the dwelling.