Buying a home comes with a very involved process. Use this step-by-step guide to help you better understand what a typical homebuying timeline looks like until you’re at the closing table.
1) Figure out whether you’re ready for homeownership
There are benefits and tradeoffs that come with buying versus renting a home. For example, as a homeowner, you won’t have a landlord that repairs appliances on their own dime. You’re now responsible for hiring a pro and paying out of pocket to fix what’s broken. The good news is mortgage payments build equity; rent payments don’t.
Buying a home also involves committing to a neighborhood for an extended period of time—often several years to decades. If you like to move around from year to year based on your lifestyle or profession, you may find homeownership isn’t for you just yet.
2) Boost your savings
It costs money to borrow a mortgage for a home purchase. The more money you put down, the less you borrow from your lender, which also means you may have fewer closing costs to cover. You’ll also need additional savings for emergencies, maintenance, repairs, property taxes, and home insurance.
3) Decide on a loan type
Not every mortgage type will fit your financial circumstances. Understand the options including fixed versus adjustable rates, shorter versus longer loan terms, and different loan types such as conventional or FHA. Do your research and ask your loan officer for guidance on choosing the right mortgage loan type to suit your needs.
4) Get a mortgage pre-approval
After you’ve settled on a loan type, it’s time to apply for a mortgage pre-approval. A pre-approval involves a lender reviewing your credit history and financial information to estimate how much you may qualify to borrow. You’ll need an estimated loan amount to determine how much house you can afford, which allows you and your real estate agent to narrow down your house hunt. Our Priority Purchase pre-approval can help you stand out amongst the competition.
5) Find a home and make an offer
Once you’ve found the perfect property, it’s time to submit a purchase offer. Be sure you work with your real estate agent to include any homebuying contingencies that matter to you. A home inspection contingency is common and may allow you to move on to another home if the inspection reveals major issues with the home that the seller isn’t willing to fix.
6) Finish the application and underwriting process
If you and the home seller agree to move forward, your lender will continue processing your loan application and getting you ready for a final approval. Be prepared to provide additional documents to support your application, including but not limited to, updated bank statements, pay stubs and tax returns.
7) Schedule your mortgage closing
When your lender grants a final loan approval, you’ll then schedule your final walkthrough and closing date. Once at the closing appointment, you’ll sign several documents transferring ownership of the home from the seller to yourself. You’ll also pay your cash to close, which includes your down payment and closing costs. Congrats; you’ve completed the homebuying process!