Once you’ve made the decision to purchase a house, everything can fall into place quite quickly! Of course, this is a big decision and a big lifestyle change, so we want to be sure that you are ready for every step that comes your way as you make your move.
Below are the most common steps to buying a house. And remember, when you work with me, I’ll guide you through every step and answer any questions that arise. One of the first things we will do when working together is take the time to sit down and discuss every line of the contracts, and every step you can expect to take along the way. We will do this prior to touring homes if possible, because I believe knowledge up front provides comfort down the road.
- Get your finances in order
Before you fire up your favorite home search portal or website, be sure that you look into your finances and credit history. This is especially important if you plan to take out a mortgage to buy your home. Lenders prefer a stable employment history, good credit and easy-to-read financial records.
Remember though, you don’t have to have perfect credit or a 20% down payment in order to buy a house. There are different mortgage loan types available to buyers who have less savings or who may still be improving their credit.
It is a good idea to select a real estate attorney and a mortgage professional that you are comfortable with early on in the process to ensure that things go smoothly. I can recommend some excellent options!
- Start your search and define your criteria
This is, arguably, the most fun step to buying a home. Go ahead and fire up your favorite home search app and start the preliminary research phase. At this time, you may want to start writing out the criteria that’s most important to you, including your preferred:
- Number of beds and baths
- School district or towns
- Home type
- Home condition — do you want a fixer-upper, or something updated?
There are dozens of variables you’ll consider as you buy a house, so it’s important to define what’s most important to you upfront.
- Determine your budget
While most buyers have an idea of their preferred budget, it’s important to speak with a lender who can help pre-approve you for a loan. In the pre-approval process, we’ll work with a mortgage loan officer, providing them with documents including:
- Your W-2 statements, paycheck stubs or other proof of employment
- Recent bank statements and savings accounts records
- Past tax records
The loan officer will review your information and determine how much you’ll be able to take out in a loan. Then, they’ll issue a pre-approval letter, which helps everyone involved in the home sale process — from you and me, to the seller and their agent — understand that you are a serious, low-risk buyer.
- Shop around for houses
Once you’re pre-approved and have set parameters for bedrooms, bathrooms and location, we can dive into the market. We can start by attending open houses, if you’d prefer a low-key entry — or we can make private showing appointments, where we will be the only people touring the house.
I usually recommend that we look at between three to five homes in our first touring day, because every house is so different and most buyers benefit from comparison shopping. From there, we can more reliably narrow down the houses that you’d be most interested in.
Whether you find your dream home on day one or we take several weeks to find “the one,” we will be sure to stay in close contact during this time. My primary goal is for you to search enthusiastically and not to settle for a house that is less-than-perfect.
- Make an offer, Negotiate Terms, and Enter Attorney review
Once you’ve narrowed down your search to the house you wish to purchase, we’ll strategize on how to make a competitive offer. It’s important to consider many factors when making an offer, including:
- The price and condition of the house in comparison to recently sold homes nearby
- The popularity of the neighborhood
- The likelihood of the seller to accept a lower price
- Your preferred timeline for closing
Once we have determined our offer price and other important details like the preferred closing date, deposit amounts and structure, and contingencies, we will submit a purchase agreement laying out our preferred terms.
The seller may negotiate any terms — from price, to contingencies, to timing and more — so it’s very important that we stay in close contact while the offer is outstanding.
After we negotiate satisfactory terms, the seller will sign the contract and I will send it to your attorney and the sellers’ attorney to begin attorney review. During this time both the buyer and seller have the right to consult with an attorney, who can then review the terms of the contract, make changes, or “disapprove” (i.e. terminate) the agreement for any reason (or no reason at all). You can expect to see communication between the two attorneys that is designed to make changes to the standard NJ Real Estate Commission prepared contract. One important thing to be aware of is that during the attorney review period, either party can change their mind. Which means if you decide that the home is not the best fit for you, you can have your attorney cancel the contract during attorney review with no penalty. This also means that the seller can also cancel…. which could happen if the sellers receive another offer during the attorney review period. So… you are not allowed to celebrate until we are past the attorney review period! Once we have satisfied attorney review we will begin the process of moving toward the closing table. If the contract is terminated during attorney review, the transaction is cancelled. If this happens, any deposit monies delivered are returned to the buyers.
- Select your loan and get approved
While the pre-approval process is important, we’ll still have to work with the lender to get fully approved on a mortgage for the property you’ve selected. The loan officer will dive deeper into your finances to ensure that you are capable of responsibly paying off the mortgage loan over the course of the loan’s term (which is typically 30 years, but can be as few as 10 or 15).
Your loan officer will also help you select the loan type that’s most advantageous to you. Different loan types benefit different types of buyers, so we will be sure to consider your down payment, debt-to-income ratio and other factors to find the loan type that best fits your finances.
- Get the home inspected, and then appraised
While the house you’ve selected may seem like a dreamland, it’s common for homes to have issues that aren’t visible to the naked eye. That’s why, when we make the offer and sign the purchase agreement, we will typically put that the home sale is contingent on a professional home inspection. If the inspection unearths any major issues in the property, we can walk away from the contract or negotiate a plan with the seller to pay for the fixes prior to or after closing.
The inspector will take a close look at the home’s foundation, systems, appliances and every nook and cranny to log the home’s issues, big and small. From there, we can determine if we want to negotiate with the seller to have the issues fixed.
The appraisal is a lender-mandated action, where a professional appraiser will come to the house to assess its value. If the home is viewed to be worth less than the price you have agreed to pay for it, then the home sale may have to be renegotiated or scrapped altogether. It’s not super common for this to occur, but it’s of course in your best interest to know that you’re paying a fair price for your new property.
- Purchase homeowners insurance
Your lender will also require that you purchase homeowners insurance, which protects your house and belongings in certain instances and also covers you if anyone is injured on your property.
Most lenders will require proof that you have secured a one-year homeowners insurance policy at the closing table. I’ll work with you to ensure you have purchase a smart, solid policy well in advance of closing.
- Make a moving plan
Boxing up your belongings can be stressful and time-consuming, so I can help arrange for a moving company that takes over some of hassle. Alternatively, if you plan to have friends and family help you move, I can provide some insights on how to make the process seamless from start to finish.
- Transfer utilities
There’s truly no worse feeling than when you move into a new home only to find out the power or water isn’t turned on. Together, we’ll navigate the process of ensuring that utility companies have properly transferred over the electricity, water, trash and internet/cable bills to you prior to your moving date. You can expect to receive that information a few weeks prior to our closing date.
- Coordinating the final paperwork
Your lender will order a title policy, which ensures that you are the rightful owner of your new house. Your lender will also give the final word that your mortgage loan has been approved.
- Heading to the closing table
Prior to closing, we’ll head to your new home one last time for a final walk-through. We’ll make sure that the previous homeowner has removed all their belongings and that they have made any agreed-upon repairs that were written into the purchase agreement or negotiated after the home inspection.
At closing, you’ll sign all the paperwork that’s needed to finalize the purchase — including the title work and loan documents. Once the paperwork is complete, you’ll receive the keys to your new home!
- Moving in
You can move in whenever you choose, but most buyers head straight to their new digs after the closing. Whether you’re having friends help you move or have hired professional movers, this will be a day that you’ll never forget. So be sure to have a bottle of champagne at the ready!
Need help buying a house?
I’ve helped dozens of buyers purchase the house of their dreams, and I’d love to help you, too. Whether you’re early in the process or ready to make your move, reach out any time for a no-pressure discussion.
P.S. If you have a real estate question of your own, feel free to reach out! I am happy to help!