Buying a house is one of the many exciting life events for individuals or families. But for anyone who has never been through the process before, it can be incredibly overwhelming and confusing. Where do you start? Who do you talk to? How do you get a loan? How do you know what to look for? The good news is that Iron Gate Real Estate has a team of knowledgeable and experienced realtors who understand the process inside and out and is more than capable of helping guide you from start to finish.
Throughout our blog, we’ll provide information, advice, and will go into detail about various topics found within this blog, including the importance of a home inspection, what to look for in a home, what the closing process is like, and so much more. But to start, we’ll look at the overall home buying process so that you have the basic steps right away.
The Process of Buying a House in 11 Steps
There are various things you can do before you even start looking for homes that will make the process as simple as possible.
- Start Saving: There are ways to get around needing a significant down payment, such as getting an FHA loan. However, there will be additional costs regardless of the down payment, such as closing costs and fees. Talk to a real estate agent to determine how much cash may be necessary.
- Look at Real Estate Listings: Get an understanding of initial asking prices and then how much homes are selling for. This will give you an idea of the market in the area and how much you can expect to be paying for your home.
- Talk to Realtors: The team at Iron Gate Real Estate understands that there are quite a few realtors in the Columbia area and we would love to work with you! However, it’s important to have a good relationship with your agent, so get to know different companies and choose the one you feel comfortable with.
- Get to Know the Area: Whether you’re looking in Ashland, Rocheport, or in the city of Columbia, you’ll be living there for probably at least a few years, so get to know not only the homes, but the neighborhood, the amenities, the school, parks, entertainment, and more.
Determine a Budget
Buying a house is a significant investment, possibly one of the biggest we make in our lives, so if you still want to keep up a comfortable lifestyle while paying your mortgage, you’ll need to determine a budget. Oftentimes, home buyers get preapproved for a loan amount that is much higher than what they can actually afford. Don’t just look at the preapproval amount, but calculate that into your monthly mortgage payment and go from there with your monthly budget. Keep in mind you’ll also be paying for home insurance, property taxes, utilities, and any maintenance costs that come up.
Find a Lender
Unless you have the cash up front, you’ll need a lender to give you the loan. The bank that you get the loan through is another important decision. Each bank will have different loan programs, fees, and processes. Choosing a lender is much like choosing a realtor; it’s important to find one that you feel comfortable with and you know can provide exceptional customer service.
Get Prequalified and Preapproved
It’s easy to want to start going to open houses right away, but this could have consequences down the road. If you fall in love with a home without knowing how much you are qualified for, the seller’s agent may not want to work with you yet. Getting prequalified is a simpler process, but can provide enough information for you to get started. You’ll need basic income, savings, and investment information to be prequalified.
To get preapproved, it’s a longer process that involves a full credit check, W-2 statements, paycheck stubs, and bank account statements. Your lender will take this information and determine how much money they will lend you. With a preapproval from the bank, you can start looking for houses for sale!
Find a Realtor
Even though you don’t need a realtor to look for homes, it makes the process much easier. When looking for a real estate agent, be sure to ask them a few questions:
- Are you a part of an agency? Or do you work solo?
- How many other clients are you working with?
- How do your fees and commission work?
- What experience do you have?
- How will we communicate with each other?
- What is your list-price-to-sales-price ratio?
- Do you have relationships with other professionals?
- Are you licensed to work in the area?
The more you know about a potential realtor’s experience, qualifications, and personality the better. You will be spending a lot of time with your agent, so also be sure that you actually like them and are able to be honest about homes you like or don’t like, your needs, wants, and more.
Attend Open Houses
Now you can finally start shopping! To help the process go smoothly, provide your agent with as much information as you can about what you want in a home. Consider the layout of the house, the square footage, number of bedrooms and bathrooms, if there is a yard, etc. With this information, your realtor will put together a list of homes from MLS listings, show you around certain areas, and will bring you to open houses. With the years of experience that Iron Gate Real Estate has, we have learned that it’s best to be practical rather than emotional when it comes to selecting a home. Even though you may get “that feeling” when walking into a home, it really comes down to whether the house really has what you want or not and how happy you will be living there in five, 10, or 20 years.
Make an Offer
When you have found a house you love, it’s time to make an offer. This is where an experienced realtor will really come into play. There is a lot of paperwork involved when buying a house, so get ready to sign your name a lot. Your realtor will help you write up an offer and guide you through the negotiations. This part of the home buying process often involves a lot of back-and-forth between you and the home seller (things to include in the contract, contingencies, closing costs, closing schedule) so we’ll go more in depth on this topic in future blog posts. If you have any questions now, be sure to ask your realtor.
Get a Home Inspection
When the seller accepts your offer, you’ll need to get a home inspection. The home inspection is a must when buying a house and will give you and the lender information on the integrity of the house (the lender will want to know that their money is going toward a quality house). This typically happens within a week of the contract being signed. The inspector will look closely at the roof, the foundation, electrical systems, heating, cooling, and plumbing. If there is anything wrong with the house, it may mean another round of negotiations to determine if and who needs to pay for any necessary repairs. If anything is really bad, it also provides an opportunity for you to get out of the contract.
Get a Home Appraisal
While a home inspection will look at the structure and makeup of the home, a home appraisal will determine if the house is actually worth what you are paying for it. The appraiser (a third, independent party) will look at certain features of the home as well as other comparable homes in the area that have recently sold in order to determine the value of the house. There are a few options if the appraisal comes in lower than the contracted sale price, which we will go into later — be sure to check back soon!
One party involved in the home buying process that many first time home buyers aren’t aware of is the title company. The role of the title company is to ensure that the seller is the true owner of the home and will handle all of the paperwork in order to have the title of the home transferred into your name.
Get ready to sign! There are a variety of documents that will be presented at closing:
- The loan estimate
- Closing disclosure
- Initial escrow statement
- Mortgage note
- Mortgage deed of trust
- Certificate of occupancy
Your lender and realtor will go over all of the documents with you, but be sure that you fully understand what you are signing. The paperwork represents a large sum of money and needs to be taken seriously.
We covered a lot of information in this blog, but keep in mind that your realtor will help you throughout the process to make sure you understand each step and most importantly, that you purchase a home you truly love!
At Iron Gate Real Estate, we help clients buy and sell homes throughout the Columbia, MO area. If you’re looking to buy a house, reach out to our team today. We can assure you that we have what it takes to make the process simple and fun.