Whether this is your first home purchase or your tenth, there are a lot of moving parts when it comes to buying a new house. You should feel in control and confident throughout this process.
We’ve compiled this checklist for you so nothing gets missed! (Although, if you follow Step 1 correctly, you should have all the guidance you need!)
Here are the pillars:
Building a Foundation
The Financials
Finding Your New Home
Insuring Your Home
The Home Stretch
Building a Foundation
Step 1: Find a Realtor
Interview a few agents and see if their personality matches your needs/wants. You want to “click”!
Qualifications your agent should have:
Local market knowledge
Good reviews or testimonials
Financial Knowledge - they can walk you through the numbers!
Works full time in the industry
Great time management and communication skills (ie. did they show up on time & prepared? Do they communicate with you in a way that you understand and feel comfortable with?)
Network connections (Effective real estate agents rely on their relationships. Do they work with other agents regularly?)
They should ask about your Housing Goals and future vision
Step 2: Know your Financials
Maintain great credit
Pay off as much debt as you can before proceeding
Your lender will be pulling your credit in the future as a part of the pre-approval process so don't worry about that just yet
Compile and save any important financial documents, including:
2 months worth of pay stubs & bank statements
2 years of tax returns & W-2’s or T4’s
Step 3: Find a Lender
Compare different lenders to understand the benefits and advantages of working with each. (Something as simple as a lower rate or term can save you thousands of dollars over the life of the loan.)
Make sure to tell EACH LENDER not to pull your credit until you're fully committed to working with one
If your credit isn't where you want it to be, work on creating a plan with your chosen lender
Your agent may also be able to help you find someone trustworthy that they have worked with before.
The Financials
Step 4: Establish a Budget
Determine your downpayment amount and start process so that the money is accessible and tied up elsewhere
Saving up 20% of a home's purchase price as a down payment is often suggested, but can be hard to do in high-priced markets (If saving up 20% isn't feasible, work with your lender to create the best plan for your needs)
Consider other costs associated with moving (ie. closing costs, moving costs, renovation costs, new furniture, etc)
Remember that just because you're approved for a certain amount doesn't mean that you have to spend that amount. Work with your lender and agent to establish a price point and monthly payment that you will be comfortable with
Step 5: Get Pre-Approved for a Mortgage
Ask the lender if you qualify for any special loans, such as VA or FHA
Get Pre-Approved; this gives you, your agent, and the lender an estimate of how much you can afford based off of your credit score and past financial documents
Work with your lender and real estate agent to determine if your file should be underwritten before submitting any offers. This will help to avoid any potential disappointments or delays during the transaction
Finding Your New Home
Step 6: The Fun Part
Discuss your home buying wish list with your Realtor. Make sure to include:
Must haves: bed/bath number, garage, etc.
Nice to haves: pool, jacuzzi, smart home capabilities, etc.
Things to avoid: pools, busy streets, etc.
Bring along your pre-approval and lender contact information so you can discuss budget and have your agent connect with your chosen lender
Determine different neighborhoods you might want to live in
Have all decision makers involved, either in person or virtually
Step 7: Find a Home
Keep your "Must Haves" Checklist in mind
Keep a journal or guide of the different houses you're interested in
Take plenty of pictures to look back at
Stay within your price range!
Bring a snack and shoes that are easy to slip on and off
Provide your agent with ANY feedback regarding the properties that you view. Both positive and negative feedback can be very helpful for an agent to find exactly what you want
Step 8: Make an Offer
Work with your agent to establish a strategy to get the most from your offer and have the best chance of it getting accepted
Sign the offer and any additional documents!
Insuring Your Home
Step 9: Do your Due Diligence
Find a reputable and thorough home inspector, if you need suggestions ask your agent
A good home inspector will help to ensure that you don't end up in a "money pit," for example, a property with lots of electricity, plumbing or foundation issues
An inspector will also report any issues found with the home that will allow you to ask for repairs during negotiations
If work is needed to be done on the property, strategize with your agent to submit a request for repairs or offer adjustment
Review disclosures and paperwork with your agent
If you will be making any additions or construction to the property, such as adding a pool or a guest house, check with the city building department to ensure zoning allows for those upgrades
Review title report with title representative and agent to ensure that there are no unknown easements or liens on the property
Step 10: Arrange for Homeowner's Insurance
Search for a homeowner's insurance policy with great coverage at a reasonable cost. Ask your lender for suggestions if necessary
Some lenders require a year's worth of homeowner's insurance up front before approving a mortgage
The Home Stretch
Step 11: Finalize Financing with Your Lender
The lender will order an appraisal on the home to verify that the market value supports the purchase price
Double check that your interest rates and mortgage payments are what you agreed upon
Step 12: Final Walkthrough of the Home
Go through the house with your agent to double check everything you agreed upon in your offer is present
Ensure that any repairs that were agreed upon in the transaction were completed.
If repairs are difficult to visually inspect, call back your home inspector or a specialist to ensure the repairs were completed correctly
Turn on all lights and appliances to make sure that they still are in good working order
Step 13: Closing the Deal
Bring everything you might need:
Form of identification
Any additional payment you may need
Sign the mortgage documents!
Step 14: Move In!
Pack a “move-in” bag with the essentials for that first day while you unpack (ie. toilet paper, snacks, cleaning supplies)
Arrange to get the keys to your new home