Buying a home can be stressful and overwhelming without the right resources. Here is a quick run-through so you know what to expect during the home-buying process.
1. Get Your Finances in Order
First things first. You need to know what your credit report says about your financial history before you apply for a mortgage. The report plays an important role in the mortgage approval process and in determining other loans offered to you. Make sure you’ve researched your credit and have a financial snapshot prepared.
2. Get Pre-Qualified for a Mortgage
Talking to someone you’ve never met before about your finances can sometimes feel intrusive, but having that initial conversation with a lender is one of the most important steps toward finding a house. A lender will reveal any issues regarding your debt-to-income ratio (and remedies, if necessary) and will establish your budget so that you’re looking in the correct price range. In many of the hot markets (Nashville being the hottest) today, you need to have a pre-qualification letter from a lender in order to even make an offer. Most real estate agents require you to be pre-qualified before they will show you any houses at all – even online.
3. Find the Right Fit in a Real Estate Agent
The relationship between you and your agent is most likely going to be a multi-faceted, long-term one. Find one you are compatible with and one that you trust. Also, do your research ahead of time – look up reviews, make sure they have experience in the area in which you are looking, ensure they have a good reputation among their peers, and research their designations (all those letters at the end of their name)
4. Determine Your Wants and Needs
Discuss with your real estate agent what your “non-negotiables” are and what your long-term plan is with your home. While it’s important that you don’t compromise your “non-negotiables,” it’s even more important to be flexible when the time calls for it. I always tell my buyers to follow my 80/10/10 Rule: if you find a house that has 80% of what you’re looking for, 10% you can change and 10% you can live with, then you’ve found the perfect house! One hundred percent does not exist – not even when you build from the ground up.
5. Start Searching for a Home
The search for your new home could take one hour or 6 months. Be ready for the possibility of a long journey, but don’t be afraid to make an offer on the first house you see. When it’s the right place and it fits into the 80/10/10 Rule, you know it! Especially in HOT markets, you have to be ready to make an offer the minute you find the right house – or someone else will. This is why it’s so important to do your homework up front so that you’ll be ready to roll when the opportunity presents itself.
6. Make an Offer
Offers vary from transaction to transaction and no two look the same. This is where having a reputable and experienced real estate agent will come into play. They will help guide you through the sometimes murky waters of the negotiation process. Ask questions and be sure you understand the contract. There are many strict timelines you’ll need to follow, as well as performance specifications, so don’t pretend you understand it all if you don’t. ASK!
7. Get a Home Inspection
Once you’re under contract, the first order of business is to get a professional general home inspection and any other inspections necessary (pool, septic, etc.). During this period you’ll receive valuable information about the house and learn more about whether it’s the right fit for you. Inspections are typically an expense of the buyer, but worth every penny. We would never recommend forgoing your right to a home inspection.
8. Receive Appraisal and Finalize Financing
Once you’ve decided to move forward with the purchase of your home after all inspections, your appraisal will be completed and any conditions regarding your loan will be addressed. Once you finalize those last conditions and make it through the appraisal process, you’re on your way to closing!
Also called settlement, the closing is the actual transfer of ownership. After the closing documents are signed and the funds are transferred, the home is officially yours! CONGRATULATIONS!!!
If you are looking to purchase a home in the Nashville area, consider giving us a call. We’d be happy to help in any way we can. Now, go start building your long-term wealth and buy a house!