The home-buying process comes with all kinds of emotions: excitement, joy, and even fear. However, with a clear roadmap and professional guidance, you can navigate this uncharted territory with confidence. In this guide, we’ll lay out a step-by-step path for you to achieve your dream of homeownership.

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1. Laying the Groundwork in the Home-Buying Process

Before you buy a home, it’s important to prepare. What does this entail? A few things. First, assess your financial health and consider the commitment that comes with purchasing property. Experts recommend that your total housing payment––a total figure that includes your mortgage, taxes, and insurance––should not exceed 28% of your gross monthly income.

For example, if you take home $6,000 in gross pay each month, you shouldn’t be spending more than about $1,680 on your home. Feel free to run some calculations and mock scenarios to get an idea of what you can realistically afford to spend on a house.

Understanding Your Credit Score

Your credit score is a pivotal factor in securing a mortgage during the home-buying process. Lenders use this metric to gauge your reliability as a borrower. Higher scores can earn you better interest rates, potentially saving you thousands over your loan’s lifetime.

2. Starting the Search With a Professional By Your Side

With your financial foundation set, the real fun begins: searching for your home. Online real estate listing on platforms like Zillow can give you an idea of what’s available in your chosen area. But nothing can replace the value of a knowledgeable real estate agent. They can offer tailored insights that may not be publicly available, such as:

  • Off-Market Listings: Real estate agents often have access to properties that are not yet listed on the market. These off-market listings give buyers an early look at homes that aren’t available to the general public. 
  • Local Market Trends and Comparisons: Agents possess detailed knowledge of local market conditions throughout the home-buying process, such as recent sales trends, neighborhood-specific price changes, and upcoming developments. 
  • Seller Motivation and History: In some cases, agents may be able to provide insight into the seller’s circumstances. For example, if you are looking to move in right away, they can hook you up with those who are urgently looking to sell. 
  • Neighborhood Dynamics: No one wants to move into a “bad” neighborhood, but it’s not always possible to determine neighborhood dynamics from online listings alone. A real estate agent can offer more context around things like community plans and school reputation. For example, if you’re willing to pay a premium to live in a better school district, your agent can clue you in on the best areas to purchase. 
  • Property-Specific Issues (and Potential): One of the downsides of exclusively using online listing platforms is that they don’t tell the whole story. Agents have insider knowledge about less-noticeable property issues, such as foundation problems. They can also highlight the potential a home may have.

Your agent will work with you to weigh these factors and point you toward homes that meet your desired criteria.

3. Making an Offer During the Home-Buying Process

Once you’ve found a property that ticks all––or most––of your boxes, it’s time to make an offer. This isn’t just about naming your price, but negotiating terms and contingencies. A good offer will be competitive and reflect current market conditions.

Home Inspection and Appraisal

An offer is usually contingent on the outcomes of the home inspection and appraisal. These evaluations are vital for uncovering any potential issues during the home-buying process that could affect the value or safety of the property. 

While similar, these processes serve slightly different purposes. An appraisal is used to determine the home’s market value, and an inspection is performed to judge the overall condition of the home. Engaging reputable professionals for these services is critical and can be coordinated through your real estate agent.

4. Closing

After your offer is accepted, the closing phase of the home-buying process begins. This is when you finalize your mortgage, carry out a final walk-through, and address any last-minute negotiations. Closing costs, typically 2-5% of the loan amount, cover various fees. Be sure to review the closing disclosure form, which outlines all the payments and fees you’re responsible for.

5. Settlement to Complete the Home-Buying Process

On closing day, you’ll sign a stack of documents, including the mortgage and property transfer papers. Once everything is signed and the funds are distributed, the keys to your new home are finally yours. Congratulations!

Your Path to Homeownership Can Be a Time of Joy, Not Fear

For first-time homeowners especially, purchasing property can feel like a monumental undertaking, and in many ways, it is. There’s so much to consider, and it’s normal to feel a bit nervous when getting started with the process.

However, by doing your research, understanding your financial situation, and working with a professional, you can navigate the situation with ease. And just think––by the end of it all, you’ll have a new home and can start laying roots and building wealth. 

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