How Does the Home Buying Process Work?
Real Estate Agents Often Negotiate a Lower Purchase Price and Closing Costs and Organize Homeowners Insurance and a Home Inspection.

How Does the Home Buying Process Work?

The home buying process can be a complicated and confusing time for many homebuyers. It is a major financial commitment that requires research, patience, and a significant amount of paperwork.

However, there are several steps that you can take to make your home buying experience as smooth as possible from beginning to end. While this information is not intended as official legal advice, it may be able to help those homebuyers who need some additional guidance or structure as they look forward to buying a house.

Deciding When to Start the Process

The first of many steps for buying a home is to decide on timing. While homes become available throughout the year, homes are typically on the market for a limited amount of time. That means interested homebuyers only have a certain amount of time to make their decisions and move forward with inspections, mortgages, and other necessary purchases before homes get taken off the market.

Because of this short window to purchase homes, many people choose to begin home shopping during January or February when homes first come on the market in order to give themselves enough time before homes start getting removed from listings in May or June.

Choosing the Right Real Estate Agent

As homes go on the market, it is essential for homebuyers to find a real estate agent they can trust. A good way to begin researching different agents is by reading reviews from past clients or asking friends and family if they have had any recommendations.

When searching for a representative, it may be wise to look for someone with extensive knowledge of the homes that are available in your area as well as experience guiding homebuyers through the process of buying a house. You’ll also want to work with a real estate agent who can negotiate good terms for you. Many buyers look for agents who have excellent communication skills and those who are willing to provide guidance even when there isn’t an official sale on the line.

Your realtor will also help with more than just house-shopping. Real estate agents also help get you set up with homeowners insurance, a company that will perform a home inspection, a title company that’ll administer closing costs, a lender for your mortgage, and much more!

Getting Your Financials Together: Mortgage Pre-Approval Letter

Once you’ve decided that buying a house is in your best interest, it’s time to begin getting your finances in order. Before applying for a loan or submitting any financial documentation, it is essential that you get pre-approved for home loans first. Sellers will likely ask prospective buyers for proof of home financing before accepting offers from them.

To get pre-approved for a home loan, you need to visit a bank and speak with one of their loan officers. They will assess your financial situation, pull your credit report, tell you how much their bank is willing to loan you, what your interest rate will be, and tell you how much you’ll have to put as a down payment. They will also tell you if you qualify for a conventional loan, a federal housing administration loan (FHA loan), or whatever type of loan is best for you. Many first-time homebuyers use loans created by the federal housing administration because they usually require a minimum down payment.

Why Do I Need a Pre-Approval Letter?

Having a letter of pre-approval from a bank is a huge game-changer for many homebuyers because it adds credibility to their offers. Whenever you submit an offer, you should always try to include a letter of pre-approval from your lender. It will likely give your offer an advantage over others, and it could be the golden ticket you need to score your dream house, even if you offer below the desired purchase price.

Understanding Your Price Range

Shopping for homes is like shopping for anything else: You need to know your credit limit before you make the purchase. While most people just want to make their own budget and get out there and start looking for their dream home, that just won’t work. Before you do any home shopping, you need to get a bank to back you up.

That’s another reason why pre-approval letters are so important. If you want the $800,000 home, but the bank says you can only afford a $300,000 home, then you’ve just wasted a bunch of your time, the sellers’ time, and your realtor’s time. You’ll also feel extremely disappointed and you may even give up on your home search out of frustration.

The bank doesn’t give you a purchase price budget to stifle your dreams, they just want you to be able to make your monthly mortgage payments without stretching your debt-to-income ratio. The loan estimate for how much house you can afford is designed by your mortgage lender to meet you where you are at financially by making your down payment affordable, your monthly payments reasonable, and your overall debt manageable.

Making an Offering

Once homes start coming on the market, most buyers choose to put in offers immediately or sometime during the first few days after homes hit the listings. This gives them a good advantage over any competing offers while homes are still new and sellers have yet to receive a full list of all interested parties.  

Because there may be several homes available in any neighborhood at once, homes with desirable features like new homes or homes with modern amenities may get more offers than homes that are on the market for longer periods of time. Homes in good neighborhoods with excellent schools will also draw interest from many buyers, so homes in these areas can typically receive multiple offers too.

Negotiating Terms

When putting an offer on a home, prospective buyers should try to negotiate terms like closing costs and fees to lower the total price they’ll have to pay when buying their home. Sellers are usually willing to accept reasonable requests because homes get taken off the market every day, and if they don’t agree to negotiate terms, they risk losing out on potential sales opportunities.

One area that sometimes allows buyers to score big time is if something is found during a home inspection that limits the capacity to use and enjoy the house properly. If something like this is found during the home inspection, your real estate agent may be able to use it as a negotiating tool to get better terms for you, like lower closing costs, so you can put more towards your down payment or make more upgrades later on.

Pre-Closing Steps: Inspection & Final Walkthrough

Once homes have been approved for purchase and a contract has been signed, the closing will be scheduled to take place anywhere from 30 to 90 days later. During the period between when homes are under contract and when contracts are finally closed, buyers should prioritize home inspections and a final walkthrough.

Your home inspection is your opportunity for you to find any hidden issues and reveal any problems the seller may not have disclosed (even though they are supposed to disclose all known issues unless otherwise specified in the purchase agreement). We cannot stress enough how important a home inspection is before committing to buying a house. Hire a good inspector, and have them give you a full report right when they are done.

Your final walkthrough will likely happen the day before closing. It’s mostly used as a time to check that the sellers left everything as agreed in the contract. Then, you’re off to closing!

The Keys Are Yours!

After closing, the keys to your new home will be all yours, and you can start this exciting new chapter! Time to make it your own and make many cherished memories!

Buying a home is a big decision and a huge financial commitment, but it’s worth the effort. If you follow these steps, you’ll be on your way to finding the perfect home in no time. If you’re in the Las Vegas area and looking for assistance with the home buying process, contact Blue Diamond Realty to get matched with an awesome realtor who has the knowledge and experience to get you the home you want at the best possible price!

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