Seven Steps of Home Ownership
Buying a house is one of the smartest investments you can make. Let’s talk about the basic process involved with making that happen. We’ve broken it down to seven key steps.
- 1. Get your finances organized
Before you apply to be pre-approved for a mortgage, you’re going to need to have some documentation about your current finances and employment history. That’ll mean W-2s and tax returns for the past two years, current paystubs, bank account statements, and any details about credit cards, student loans, or car loans.
You’ll also want to know your credit score. If you haven’t checked it recently, now’s the time. You can request a free credit report from each of the three major credit reporting bureaus (Experian, Equifax, and Transunion) once each year. Take some time to review them and address any issues or errors that you find. Getting things addressed in your credit report can take some time, so it’s important to start this part as soon as you’re able. Your credit score is one of the determining factors in how much interest you’ll pay on your mortgage—so it’s worth the effort.
- 2. Get preapproved
Being pre-approved makes the whole buying process easier: you know the price range you should be looking in, and the seller knows you’re fully-prepared to enter into the transaction. When you meet with your loan officer, they will review your documentation and make sure you have everything you need to start the preapproval process. They’ll also help you find the right kind of mortgage for your situation. You can use our How Much Home Can I Afford? calculator to get a general idea about how much you can spend on your home.
- 3. Find a real estate agent
A real estate agent will help you with search for listings, arrange property viewings, handle negotiations and your paperwork—so your purchase runs as smoothly as possible. So, finding an agent you feel comfortable and confident about is a priority. You’re probably going to be spending some time together. Asking your friends and family for recommendations of real estate agents they’ve worked with in the past is a good place to start—so long as they have experience in your price range, and ideally, first-time homebuyers. Remember, good communication and expectations about this working relationship should be a priority. Take your time and find someone with the approach and experience to help make your experience a good one.
- 4. Find a home and make an offer
You found it! You’ve seen a lot of houses during your search, and probably learned a good bit about your priorities for a home in the process. But this one—this is the place you’ve been looking for. You’re excited, and your real estate agent is excited for you. “Let’s make an offer,” they say.
An offer is just an initial draft of a purchase contract that includes a price, a specific closing date, contingencies based on appraisal or inspection results, or even requiring the seller to pay certain fees or closing costs. Your agent begins by researching comparable properties in the area to help determine a price to present that is fair and in alignment with the market. It might be less than the listed price of the home, or even a little more depending on what they discover—but it should always be within your budget. Or, it’s just not the right place after all.
Counter offers are sometimes made by sellers—to refine an initial offer that wasn’t quite what they hoped for. That’s totally normal. If their counter offer isn’t something that works for you, you can offer a counter offer of your own. Once negotiations are agreed on by both you and the seller, you’re ready to go.
- 5. Get the home inspected and appraised
Your real estate agent can recommend a good home inspector. And you should plan on being present for the inspection, too. It’s a great opportunity to learn about the house and how it works—from plumbing to electrical systems to appliances. If the inspector discovers any serious issues with the home, you can negotiate with the sellers to fix them, or reduce the price so you can get them fixed.
Alaska USA will hire an appraiser to determine the market value of the home. This is a way to ensure that you don’t end up paying more than the property is worth. If the appraisal comes in lower than the price you’ve agreed to, it’s an opportunity to renegotiate or cancel the deal. If the appraisal is higher than the price you’ve agreed to, that’s awesome—you have additional equity in your house already.
- 6. Closing
You’ll need to get some things in order before you close on the house. You’ll need to get homeowner’s insurance (or any other required insurance like flood or earthquake) in advance, to present proof of the policy at closing. You’ll also be contacted by the title company to set up an appointment for the closing. Their role is, generally, to make sure that all the documentation and forms get signed and are appropriately organized, fees are paid, money is distributed, and the transaction is properly recorded.
When you meet at the title company for your closing, they will be acting as a neutral third party, to make sure that the terms and conditions between buyer and seller are met, that lender’s conditions have been addressed and paperwork has been signed, that money actually changed hands, and that the title to the property is transferred to you.
There is a lot of signing and initialing. Don’t worry, they have lots of pens.
- 7. Get the keys.
Once everything is all signed, you get handed the keys to your new place. That’s it! You bought a house. Time to call your friends to help you move in. Especially the ones with trucks.
Ready to get moving?
If you’re ready to get the ball rolling, get in touch with a loan officer today—we can help you get organized and talk about how we can best help you get into a home of your own.