What The Home Buying Process Really Looks Like

From the outside, purchasing a home looks pretty simple: Find a home you like, offer on it, buy it. But when you’re in it, you quickly learn that home buying involves budgeting, searching, offering, inspection, insurance, title, appraisal, underwriting, closing, and more. Here’s what to expect:

Stage 1: Define your budget

Yes, you’ll need to qualify for a loan. But just because a lender can lend you a certain amount doesn’t mean you should ask them for the full amount. Determine what payment is comfortable, not just affordable.

Once you know the price you can afford, determine what you want to spend. Factor in closing costs, property taxes, homeowners insurance, mortgage or flood insurance if applicable, association dues if applicable, routine maintenance costs if applicable. Determine how much cash you’ll have right after closing.

Get prequalified for a mortgage. This is an estimate of what you can borrow based largely on information you provide. Next, get preapproved for a mortgage.

This is based on verified assets, credit, debts, income, records. This number tells you how much you’re allowed to borrow, not how much you should borrow. It doesn’t guarantee you can buy any home up to that amount, as there are condo and insurance rules too.

But it does show sellers that you’re serious and that you’ve begun the process.

Stage 2: Define your wants

Deciding what you want in a home and neighborhood can help you zero in on homes to see. Categorize them as needs, wants, deal-breakers. It’s common for priorities to shift after touring homes, maybe that kitchen remodel isn’t as important as a shorter commute.

Or maybe that gorgeous morning light means more to you than you’d thought. Think about what’s important now and in the future. Can you live with stairs?

Do you want something with less maintenance? Pets? Parking?

Home office or craft space? Growing family? Shrinking family?

How long will you stay? Remember, the goal is not perfect. It’s a place where all of the imperfects are manageable.

Stage 3: Start looking

Touring seven homes in one sitting can get confusing. Take notes on the listing sheet to keep track of the homes and jot down other impressions, morning/evening light, noise, layout, condition, monthly dues, parking, storage, repairs that need to be made right away, etc. Consider visiting promising properties more than once.

Go back at another time of the day or another day of the week to get a sense of noise, traffic, parking, light.

Stage 4: Make an offer

Once you find the right home, we’ll help you put together a written offer. Offers include the amount of deposit, financing, closing date, contingencies, any included items. Contingencies can help you walk away from a contract.

They may seem scary for the seller. And while sellers like offers with few contingencies and clean contracts, it’s important to make sure you understand what happens if you agree to give up a contingency. We can talk about the pros/cons of each.

We’ll discuss recent sales that can help us determine what to offer. Chances are, the seller will respond with a counteroffer. At that point, we’ll circle back around to Stage One and determine whether it makes sense based on your original budget.

Remember, it’s a negotiation. The goal is to find terms that work well for you. Winning at all costs against the seller won’t help you later.

Stage 5: Escrow and underwriting

This can be a slow-moving process with long stretches of time where nothing seems to be happening. During this time, a lot is going on behind the scenes. Your underwriter is reviewing your loan.

The appraiser is making sure the bank’s investment makes sense. The title company is making sure there aren’t issues with the home. If you’re buying a condo, the association is reviewing your file and checking its own budgets, rules, reserves.

If you’re in Florida, your agent is helping you secure your homeowners insurance. This can be difficult to obtain in our current real estate market. Patience is the order of the day during escrow.

Stage 6: Close

Once your lender approves your loan, your title or settlement company will prepare to close. Everyone will receive closing documents ahead of time and schedule a signing. Be sure to review your Closing Disclosure, a long document outlining all of your final costs, and compare it to the Loan Estimate you received when you applied for your mortgage.

Let me know if you have questions. Wire transfer instructions come separately, we’ll be extra careful to confirm they’re authentic. After documents are signed and funds are collected, they’re recorded with the county.

Then, after everyone takes a deep breath, keys are released. Congratulations, you’re a homeowner!

Details that deserve extra attention

It’s easy to get overwhelmed with everything you’ve got to do, especially if it’s your first time. Hopefully, this outline of the basic stages will help.

Research neighborhoods and set the budget

Before you get too far along in the process of looking for your dream home, it’s critical that you sit down, go through your finances, and decide on a firm budget. Be careful not to fall in love with a photo of a house you can’t afford. Determine how much of a down payment you can afford, and have a sense of your monthly payment.

Take into consideration property taxes, homeowner’s insurance, and possibly Home Owners’ Association fees, if applicable. Remember that the goal of a successful negotiation isn’t to crush the other side, it’s for you to come out of it with terms that make sense.

Understand the loan process

Find out how much of a loan you’re eligible for from a lender. Be aware of the difference between fixed and adjustable rates, and consider working with a mortgage broker who can offer multiple lenders’ products. Understand what happens at closing, how much of the process is controlled by the Lender, and what you can control.

Once you’re under contract, it’s critical that you provide any documents they need immediately. Do not make any changes to your employment or credit situation. Provide documentation for any large transfers into your accounts.

Be patient during quiet spells, chances are the Underwriter is reviewing your file. Understand the difference between Conditional Approval and being cleared to close.

Tour homes with resale and condition in mind

Work with a Buyer’s Agent to find properties in your price range and go through your must-haves and nice-to-haves. Don’t forget to think about resale value. Have a sense of whether you’ll be staying for a few years or a couple of decades.

Visit areas at different times of the day if possible. Consider what kind of shape the home is in and what kinds of projects you’re willing to undertake. Be aware of potential problems with septic tanks, wells, mold, flooding, etc.

Check on utility costs if it’s vacant, or ask the owners if occupied.

Submit an offer and negotiate terms

Once you find the right home, have an Agent help you with a written offer. In addition to price, sellers consider contingencies, timing, financing, etc. when looking at offers. If it’s a condominium, review the association’s rules, understand any special assessments, budget, and reserves.

Attend an association board interview and fill out any condo association applications. Be flexible with counteroffers. There are many variables that can be negotiated besides just price.

Be aware of special circumstances that come into play in Florida with insurance, such as four-point inspections, flood insurance requirements, wind-mitigation forms, and determining the age of the roof.

From contract to closing

Once an offer has been accepted, both sides have deadlines and responsibilities. An appraisal to determine value for the Lender’s sake is different from an inspection to determine condition for your sake. If the appraisal comes in lower than the sales price, you may be able to renegotiate, meet in the middle, make up the difference in cash, or explore other options depending on the terms of your contract.

Get any repair requests in writing. Create a calendar of the process and make sure you keep tabs on important dates, deadlines, etc. Once you receive your Closing Disclosure from the Lender, go through the numbers and compare them to your original Loan Estimate.

Have your Attorney review any questions if applicable. Be sure to call your title or settlement company for wiring instructions instead of trusting emailed instructions. Be present for your final Walkthrough of the property and make sure it’s in the agreed-upon condition, items are staying that were supposed to stay, agreed-upon repairs have been made, etc.

Read over the mountains of paperwork you’ll be signing, make sure all figures and dates are correct, ask questions, etc. Amend your contract for any last-minute changes of dates, repairs, credits, etc. The transaction isn’t over until your home is paid for and recorded, then you can relax with those keys.

Written records are extremely helpful. Make sure everyone involved has a sense of the process and what to expect. Put any changes in writing.