Home buying from the beginning

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Residential real estate deals range from relatively simple to complex. Professionals such as loan officers and real estate agents can help guide buyers through the process. This guide is not comprehensive or intended as legal advice.

Finances

After deciding that purchasing a home is the right long-term decision, potential buyers should look at their credit scores. To qualify for a mortgage a buyer will need good credit with a history of paying bills on time.

Buyers can also contact a bank or credit union to talk to a loan officer about getting prequalified for a mortgage.

Search

A real estate agent can help with searching for a home. Furthermore, websites such as Zillow.com and Trulia.com can show buyers what’s on the market.

Oftentimes when searching buyers take into account the home’s price and square footage as well as intangible factors, such as the quality of the neighborhood, surrounding schools and parks, and aesthetics.

Offer

A real estate agent can collect data on similar homes sold recently in the neighborhood to see if a home in which a buyer is interested is priced well.

When a buyer has settled on a bid amount, a real estate agent can help him or her through the bidding process. If the bid is accepted the transaction may move forward. If not, the buyer can submit a new bid.

Inspection & negotiation

The inspector will look at the home for issues such as water damage, roof problems and slope of the house.

After the inspection the buyer can negotiate the price or ask for repairs. At this point the buyer may be free to end the process and continue the search elsewhere if he or she chooses.

Closing

Before closing on the home the buyer may obtain financing or a mortgage from a bank as well as home insurance. To do this the buyer will need to coordinate various types of documents.

Closing is typically held in an office setting and important documents are signed. The transaction is complete when funding is confirmed by buyer to seller.

Important documents

• Identification
• Social Security card
• Credit report
• W-2/1099 statement for prior years
• Federal income tax returns for prior years
• Pay stubs with earnings from prior months
• IRA, 401K statements for at least the past two months
• Evidence of financial assets and account balances such as bank accounts and stocks
• Titles for cars, boats or other vehicles
• Evidence of debts including car payments, credit cards, student loans
• Value of life insurance policy and monthly premiums

Out-of-pocket expenses

• Down payment: 20% of the home price on average
• Closing costs: 2-5% of home price
• 1-3% of home price earnest money
• $400-$500 home inspection
• Home insurance varies with home price
• Moving equipment: varies depending on move

All prices may vary. This list is not comprehensive.

What’s next?

Move in: New homebuyers can move themselves, rent a truck or hire professionals.
Maintain: Maintenance is necessary to ensure a home’s value does not depreciate.
Change locks: Research reputable locksmiths, or ask a friend or colleague for a recommendation.
Purchase extras: A new home could require anything from drapes to smoke detectors.

Do’s and don’ts

DO

  • Tell the lender of salary, address or compensation changes
  • Obtain homeowners insurance for the home’s value
  • Document any deposits into bank accounts

DON’T

  • Take out new lines of credit
  • Change jobs without telling the lender
  • Make large purchases such as cars or large appliances

Sources: Department of Housing and Urban Development, National Association of Realtors/Community Impact Newspaper

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