How to navigate the homebuying process
The homebuying journey is one of the most exciting events you will do, whether individually or with a family. Home ownership is one of the largest investments in most of our lives, so it’s important to be prepared and knowledgeable before you begin the journey.
What you can expect during the homebuying process
Home buying is both a personal and financial investment. You’ll likely be spending a lot of your time in your new space, making memories for years to come. Thinking about what you want, including the smallest of details, is an important part of the home buying journey. This helps determine what is and is not negotiable for you.
Before you begin searching for a home, be sure you have an idea of what you’re looking for. This can help guide your approach to the home buying journey.
Here are some questions to ask yourself before starting your personal journey:
- What can I afford?
- How much do I, or will I, be able to save?
- How long do I plan to live here?
- What neighborhood do I want to be in?
- What type of home do I want? (single family, condo, townhouse etc.)
- How much maintenance do I want to be responsible for?
- What features are non-negotiable for me?
- Am I willing to buy a fixer-upper?
Remember, the home buying journey is a balance of what is realistic for you and what will make you happy in the long-term.
How to prepare for buying a home
The home buying journey starts with evaluating your needs and wants. Is it time to move into a more permanent space or invest in the home you’ve always dreamed of? Once you’ve determined your needs and wants, there are a few things to prepare before you begin your journey. Some items to consider are to determine how much savings you'll need, gathering documents for the mortgage application, and decide when you plan to move forward.
Homebuying tips and checklist
- Check on and build up your credit score
- Continue or begin to save money
- Determine what you can afford
- Make a list of your non-negotiables
- Find a lender
- Build your home buying team
- Get prequalified for a loan
- Start looking at homes
- Make an offer
- Get a home inspection
- Have your lender order the appraisal, if required
- Close on your new home
Apply and prequalify for a mortgage
Before starting the home buying journey, try to be clear on how much you can afford and get prequalified for a mortgage.
Getting prequalified for a mortgage means giving your lender a look at your finances so they can assess how much of a loan you may qualify for. Prequalification can help you better focus your home search based on price, and may help you stand out from other buyers who aren’t prequalified.
To be sure you're getting the best deal, talk with multiple lenders and compare their mortgage interest rates and which loan types best meet your personal needs.
With prequalification, the Home Lending Advisor will ask for information about your income, employment history, monthly bills, the amount you have available for a down payment, and possibly additional information. They will then provide you with an estimate on how much you may qualify for.
You can apply for your loan in four easy steps:
- Complete an application with your lender of choice
- The lender will send you a Loan Estimate, which includes information about the costs and terms of the loan.
- Review the estimate to make sure you understand and agree with everything disclosed.
- If you’re satisfied with the terms, notify your Home Lending Advisor and proceed with the application.
Finding your home
Finding the perfect home for you and your family, whether it’s through a real estate agent or through online search is not always linear; meaning you may start with a real estate agent but could potentially find a home on your own or vice versa.
Make an offer
Making an offer can take time. You’ll want to assess what kind of offer is appropriate based on the seller’s asking price and consider what contingencies you may want to include. Depending on the current market and your needs, you may want to make an offer lower than the asking price in order to leave room for negotiation.
Alternatively, you may be set on buying the home and offer the seller's asking price to reduce the time it takes going back and forth with negotiations. The seller can either accept, counter or decline your offer. This process can take a few days depending on other pending offers, the current market, and the time allotted for the seller to respond, which is typically 24 hours.
Home inspection
A home inspection is an examination of the property once you're under contract for the home. This is a critical step because it may uncover hidden problems with the home. If there are significant defects identified in the inspection, you can typically back out of your contract without penalty. Your real estate agent may recommend a home inspector. If not, you can easily find someone in your area. Once the home inspection is done, you can determine how you want to move forward.
Home appraisal
Your lender will order an appraisal, if required. The appraiser determines the market value of the property by assessing the condition of the home, and by reviewing recent sales prices of comparable homes in the area. In some instances, the property may be listed for more than the appraised value. If this occurs, talk to your Real Estate Agent about your options.
Closing on the home
Congratulations — you've made it to the final step! Closing on a home usually means a final walk through of the house and signing the documents to make it legal. Take a close look during the walk through to make sure any items that needed to be addressed were taken care of.
Once all the necessary documents have been signed and closing costs have been paid, the ownership will be legally transferred to you. Making it through the home buying process is extremely rewarding but it's important to pay close attention to the steps along the way.
Parts of the home buying process to look out for
The homebuying journey may take time. Although there are important milestones to hit along the way, you will be able to take them on with the right strategy.
Saving money
A crucial part of the home buying journey is saving up for it. You'll want to estimate of how much money will be required upfront. Once you’ve figured this out, you may start mapping out how you can put money aside.
The typical upfront cost is the Earnest Money Deposit (EMD) which is required when you enter into a contract. After that the remaining funds due, such as closing costs and down payment, will be paid at closing. If you don’t already have one, you may want to consider setting up a personal savings account that could help you save for your dream home.
Selling your current home
In some instances, buying a home may mean selling your current property. This can be a bit more challenging because you’re participating in two transactions at once. Some people tackle this by selling their current home before buying another. One thing to consider is that one of the deals may fall through, so you may sell before you’re able to buy or vice versa.
Credit score
It’s helpful to have your credit score in a good place — otherwise, this may affect your chances of getting the mortgage you want. If you can pay off any outstanding balances or debt in advance, this could improve your score. Buyers with higher credit scores tend to secure loans with a lower interest rate.
Location is key
Finding what you need and what you can afford in a desired location is a balancing act. Some buyers secure a house in their desired location by finding a smaller more affordable home. Others buy their ideal home and compromise on location. Another strategy is buying a fixer-upper and improving it over time, potentially resulting in additional costs along the way.
You can do it
Navigating the homebuying journey can take time, but nothing you can’t handle. Doing everything you can in advance to save money and prepare can help make your journey the smoothest one possible.
