What Are The First Steps To Buying A Home?

Buying a new home anywhere in the world is a pretty big deal, especially in a time where competition for great homes is at an all-time high. That said, things have changed a lot from the 50s when buying a home was a much more straightforward and cheaper process. Lower home prices, fewer people living in major cities, and lower mortgage rates made it easier to look for and buy a home without stress.

Learn How To  Buy A Home Without Stress

In today’s world, buying a home is a complex process with a lot of moving parts. The worst part of all this is… there are NO ASSURANCES you’d be able to get the home of your dreams after all of the effort invested in the process. This often leaves many a home buyer disappointed with the entire home buying process. Sometimes, some of these home buyers get lucky and find the “perfect” home… but many others do not have such luck and are left to scrap it out in a fiercely competitive home estate market. 

For experienced home buyers, the steps for buying a house are not as difficult, as they already know the workings of the market and have an idea of what to expect. They are also better informed and know what directions to look in for certain services. However, first-time homebuyers do not have this advantage and are left at the mercy of home agents who are just out there to make a quick buck.

We do this because we believe that everyone deserves the opportunity to own a great home. But with the way the market is structured, most people may never get the chance to own one.

STEP 1: DREAM IT!

Home buying is just like any other endeavor you embark on. Just the same way you draw up a business plan (with components like feasibility studies, and SWOT analysis) before starting any business, you also need to draw up a “mini-plan” before you start your home buying journey.

Although it doesn’t have to be as detailed as a business plan (it’s a house you’re buying… not scheming to enter the White House😁), it needs to have vital details that will guide you at different parts of your home buying journey. Before setting out on your journey, you must have a clear mental picture of what you’d love your home to look and feel like.

You should draw up a list of preferences in the order you like… consider the things most important to you in a home (how close is it to the city centre? What are the features I love about my friend’s home that I’d love to have in mine? Would I be okay with carrying out some renovation? How many bathrooms would I prefer in my home? Do I love a full-sized kitchen or does it take up too much space? Is there a gym nearby? Hope the kids won’t have to take 3 buses and a train to get to school?).

This step —one of the vital steps to buy a house—helps you determine what you want —and don’t want—in a home. It also means you can paint a clear picture of what to look out for, how to align your priorities, and what your possibilities are in the market.   

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Step 3: Reach Out to Lenders

 This is a vital part of the home buying process, especially when you plan to take out a loan to finance your new home. Just the way it is with a business, you need to find the best loans with the best rates suited for your finances when looking out for a home. You also need to make sure any loan you pick out has good and beneficial terms for you and you can repay the loan with relative ease. 

Sometimes, you will need to reach out to multiple lenders, banks, credit unions, and other credible credit institutions. However, we advise you to talk to at least 3 of these bodies including —but not limited to— a national bank, your local credit union, and a mortgage broker. 

 This gives you a good grasp of different options to explore, as you’re not limited to one option. Not only that, but you also want to pay as little as possible on your initial down payment or closing costs, and lenders can help you achieve this by offering you loans with solid perks like good down payments, sensible closing rates, and great interest rates. 

 You must ask questions about potential closing fees, down payments, and other fees involved in the home buying journey to the different lending institutions you reach out to. 

 One good thing is, that some lenders may not even require credit checks before answering some of your pertinent questions about what fees to expect, the structure it may follow, and other important things you need to know.

 Once you have been able to contact all the lenders you’d like to talk to, you can look back at step 2 from a realistic point of view, take stock of the houses you can afford (now you have an idea of how much you’d get as a loan), and then use this information going forward to improve your search.

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Step 4: Define Your Search

Now that our first three vital steps are out of the way, it is now time to start laser-targeting and narrowing your search to be more specific. At this stage, we believe you’ve drawn up a list of preferences (like we suggested in step 1), you’ve taken stock of your income, expenses, and how much you can commit to buying a home (just like we advised in step 2). You’ve also reached out to lenders and other credit bodies that can help you with loans to secure your dream home (just like we told you in step 3).

Taking you closer to owning your dream home, this step helps you determine the homes in the region of your choice that are within your grasp. Now, you have a clearer picture of what you want (a townhouse? An apartment? Or perhaps a condo?), how much you are willing to budget for it, how big you’d love it to be, and other criteria about your home. This way, when properties that match your criteria are available, we notify you immediately via any channel you’d prefer.

You see, despite the fact there is low inventory, there will still be a lot of options for you to pick from and we don’t want you to make the wrong decision when the time comes. This is why it is vital to plan ahead and streamline your search.

This part of the home search also helps you know if your budget and preferences are a good match or if perhaps you need to realign your priorities. It means you only bid on homes that are within your preferred specifications, saving you time, energy, and other resources that could have been wasted searching out homes that do not fit what you want.

Now, you may wonder… why am I defining my search before I meet a home agent?

Well… it’s simple. You see, it is important that you equip yourself with the right information before finding an agent. This helps you know what to look out for in any home agent, know how to select the right agent for you, and ask that agent the right questions when you need to make key decisions in your home buying journey.

Now that you know you need to define your search, you can avoid inexperienced agents that will wear you down and get you bidding on every home… even homes that are not part of your preferences.

STEP 5: Find Your Agent

Now that you know what you want thanks to the earlier steps in this guide, here comes the time to find an agent. The previous steps leading to this have prepared you for this part of your journey, as you now know what to look out for in an agent, the questions to ask the agent, and … . An agent is a key part of your home buying journey as a good agent guides you by showing you a deeper knowledge of the market while connecting you with sellers who have properties that fit your criteria (just like we talked about in step 4). 

When scouting for an agent, here are some vital qualities you should look out for:

• Competence: Someone who understands the market well and can connect you to great home and potential investment opportunities with certain properties is a good fit.
• Responsiveness: You want an agent who is easy to reach on phone (email or Social media), responds quickly to your messages even at odd hours (not saying you should bug your agent with calls at 1:13 AM on a Sunday morning though), and can move quickly in a competitive market. One like ours who has no issues pulling over and helping us book a showing at 9:30 PM on a snowy night while driving from Spokane to Seattle is definitely a keeper.
• Aggression: An agent who moves fast and connects with new sellers quickly is a top asset. This means you are always on top of the news and can get to some of the great offers quicker than other home seekers.
• Communication: A no-brainer, an agent who can communicate quickly and clearly enough to you —and sellers or vendors— is one you want to keep close.

Other qualities that can help you refine your searches like trust and experience can also help you when picking an agent.

STEP 6: Look At Homes

This is where you take a tour of the homes you have on your itinerary. Now, you don’t just consider the interior and other things like wiring, plumbing, or even aesthetics of the home. You also survey the environment

>Also examine the flooring, and the material used for the flooring, and make sure the flooring is level. Also, look out for other parts of the house and check out for potential structural problems. If you can, —a BIG IF by the way— find a professional like a structural engineer or builder to accompany you on your home tours. While this may lead to some extra cost for you, they will be able to identify potential structural defects and issues and call your attention to them.

With some homes, you may need to carry out renovations. These renovations could alter the house to suit your taste and style, or perhaps correct something you’d want to see look better. Whichever one the case is, assess the home while on your home seeing tours, and check out how much renovation you’d need to carry out. With older homes, renovations are almost a certainty, so it is a wise idea to factor in the potential costs of these renovations when looking out for a home.

It is also good to talk to your agent about your expectations with renovations —assuming you have not done that in step 5— so they understand the type of homes they suggest to you when looking at homes.

STEP 7: Secure a Pre-approval letter

Remember the lenders from step 3 yeah? This is the time where you need to get across to them and get them to pull your credit score so you can be approved. This step is very important to getting your home loan approved. You see, before you can get a home loan approved, lenders will consider certain factors like:

• Debt-to-income ratio (DTI) 
• Loan-to-value ratio (LTV)
• FICO score
• Credit history 
• Employment history
• Income

All these will help them understand where you know, figure out if you are eligible for a mortgage, and help you draft a pre-approval letter. Your credit score isn’t greatly affected, as you can always pull up multiple credit scores in the space of 30 days. Keep this in mind when you approach lenders to help you with a pre-approval letter for your home loan so your credit score isn’t affected.

One more important thing to note with this step is; that pre-approval letters are only valid for a defined time length, so you need to be sure you’re ready to take that step before signing up lenders to help you with a pre-approval letter.

STEP 8: Pre-inspection

This step is a bit different from step 6 where you take tours of different homes you are interested in. Here, your agent advises you to either go for the home inspection yourself or get a professional home inspector to check out the home for you. This is best done before an offer is made for the home.

A home inspection will help you: 

• Determine the state of different systems in the home.
• Know how to present your offer.
• Identify deterioration —if there’s any—and provide recommendations.

In certain instances, you can negotiate an agreement with the seller to complete repairs identified by the home inspector before closing the deal. This can help you present an offer that reflects the reality of the home. When going for a home inspection, it is vital you examine:

• The structure of the home: Are there any cracks? Do funny-looking marks appear on the walls? Is the ground level or are there any issues you may need to look deeper into? 
• The exterior: Does it need any more work or do you love it the way it is?
• The interior: Check out the walls, windows, floors, ceilings, attic, and basement—if there’s one.
• plumbing and electrical systems.
• The Roof and also check for pests.

 
This will help you discover seemingly invisible problems that may have been lurking around the home—to the surprise of the seller. 

It is no news that a home inspection comes at a cost, but for me, I was able to split the cost of a home inspection with another potential buyer—some of the perks of having a savvy agent. So if you can go down this route, please do. You should also know that a home inspection is a KEY part of your home-buying journey.

To wrap it all up, a pre-inspection helps you understand the state of the home, know where repairs are needed (if they are needed), and present a realistic offer that reflects the state of the home in the market.

STEP 9: Let Lenders Compete For Your Business

Before I go on to explain this step and how it can help you on your home-buying journey, let me first thank you for sticking with me to this point. To step 9, now that you have the home you want within your sights, have an idea of the offer to present, and know what other competing offers—if there are any—are like, you can speak to lenders about the types of loans they have.>

Here, you look out for loans that have low-interest rates and also the least amount on monthly payment. This means you may need to talk with a lot of lenders before you can find that perfect loan for you. It would also be best to get a variety of options so you are spoilt for choice rather than being stuck with a lender whose terms you may not fancy.

You can choose the lender with the most favorable deal to you, and now, armed with your pre-approval letter (remember step 7 ?) you’re ready to put in an offer.

STEP 10: Submit An Offer

Finally… you’ve scouted around, found the house you love, taken a hard, long look at the home and you’re now ready to buy. The final step of your buying journey, is one place where you may need to collaborate with your mortgage lender and agent. Together, all 3 of you will study different offers, look at what works for you (and what doesn’t), and then craft a compelling, yet competitive offer for your dream home.

Depending on the market and who you are working with on this one, this offer may include waiving certain contingencies like an escalation clause and also putting in a compelling cover letter.

I also advise that you stay near your phone at all times in case your agent or the seller needs to reach out to you. You also need to be ready to move quickly and ensure you have all the required paperwork and documents at hand. The reason I’m telling you this is simple, you see if you wait till the very last second or till your lender inquires before you start gathering your documents, you would not move as fast as you can and you will eventually miss out on an amazing deal. 

So I advise you to get your W-9 ready ahead of time to save you unnecessary hassles and also double-check any other important documents you’ll need before you submit your offer.

To wrap this section up, let me reiterate the important points for you. Make sure you reach out to your lender and agent before submitting your offer, ensure you throw in a compelling cover letter—or anything that can make your appeal stronger—to strengthen your bid, and don’t forget to get your vital documents ready.

So, there you have it. These are our 10 steps to buying a home for the first time—or as a repeat buyer. Although every step in this journey has its unique challenges, these steps will help you get around the real estate market like a pro and nail down the home you want to buy.