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3 Steps To Start Buying a Home

First time buying a home? Or maybe haven’t bought in 10+ years? How on earth do you start the process in 2021? This post is here to educate!

This is it. You’re determined that this is the year you’re going to stop renting and buy a house. You’ve probably been online looking at Zillow, Realtor.com, or another similar website to start finding that exciting new property. Looking at all of the different possibilities and envisioning yourself in them is exhilarating!

Okay, you’re ready to…wait, what do you do next? Should you drive by the house and call the number on the sign? Or maybe click on an agent advertisement you see on the home site you’re browsing? Maybe you should google what the next step is?

If you want to have a straightforward home buying experience that feels good and protects you, then these are the first 3 steps you should take:

1. Have a Home Buying Consultation

Just like any serious endeavor, you should become educated about the process before you start. Think of it like learning to swim before you jump in the ocean. Most first-time buyers are overwhelmed at how long and complicated the home buying process is compared to other purchases they’ve made in their life. Even with all of technology that exists to streamline the process, there are still a lot of moving parts and due diligence to carry out.

If you have a realtor you plan on using to represent and guide you through the process, now is the time to contact them and schedule your appointment. If you don’t have a realtor, this is the time to start interviewing and hire somebody you connect with.

Once you do, the entire process will be laid out for you from start to finish. You’ll go over how to obtain financing, what your local market conditions are, how to start looking at homes, what to look for when looking at homes, how writing an offer works, how the transaction works, what you have to do during the transaction, how long it takes, etc.

(You can download a free copy of our entire home buying guide here: Your Guide to Homeownership)

Now why can’t you just google this? Surely, all of this information can be read on your own time with a quick search. And that’s true…the only issue is that there is a lot of conflicting professional (and non-professional) information out there. The buying process can change anywhere from a lot to a little depending on location and price range. What is considered smart advice and wisdom varies from country, to state, county, city, and sometimes even neighborhood. The hours that you’ll spend sifting through info in blogs and forums with varying advice can be condensed into one meeting that takes less than an hour, is conducted by somebody who works full time in your area, and has information that is accurate and directly related to you.

2. Obtain Financial Pre-Approval

Paying cash? Tell me your secret, you’re better than the rest of us, and you can skip to #3. If you’re one of the vast majority of home buyers who is planning on getting a mortgage, then getting pre-approved for your mortgage is your next step.

So what is getting pre-approved? This is when you talk to a lender, be it your bank, credit union, or a private mortgage lender, and start the process of getting approved for your mortgage. This is not the same as getting fully approved, because you cannot do that until you’ve chosen a house and had your offer accepted. This is simply the lender running your credit, looking at your assets, and looking at your income to determine what your official budget is.

There are two very important reasons to do this now.

  1. You have your official budget

    You likely know how much you’re comfortable spending each month for your mortgage, and may have even played around with an online mortgage calculator. Those are great first steps, but this will let you know the official amount that a lender is willing to offer you. Without this, you’re just making a best guess, and that can sometimes lead to heartache: there have been too many buyers throughout real estate history who fell in love with a home, only to find out that they weren’t actually qualified to buy it. Getting pre-approved now will save you that experience and allow you to look at the right homes.

  2. You can’t write an offer without pre-approval

    In this market, writing an offer before you are pre-approved is a surefire way to get it rejected. Once you’re pre-approved, your lender will give you a letter stating this, and that letter is proof that you are most-likely good for the amount you’re offering.

    Say for example, you are pre-approved to buy a home up to $300,000. Then you find a home for $300,000 and want to write an offer. When you submit that letter with the rest of your offer paperwork, it shows the sellers that the amount you’re offering is legitimate. Without the letter, the sellers and their agent have no proof that you’re able to truly spend that much, and will wait to find a buyer who can.

3. Determine Your Needs and Wants

So you’ve had your consultation, and you have your official budget, so now it’s time to get out and start looking! Well, that is, until you decide what you’re looking for.

If you’re this far into the process, you likely have an idea of how large of a house you need, what cities you like, and maybe even what style you like. Now that you have your budget and are educated about the local market, you can take that information to come up with your official list of “needs” and “wants” that make sense for your situation.

“Needs” are defined as exactly that: things you need in your home. If the home does not have them, there is no way that you’ll buy it. Needs are going to vary greatly based on the person. Common examples are location (city, neighborhood, school boundaries, etc.), architecture (ex: need a ranch because I can’t do stairs), or bedrooms (we have 4 kids, so a 3 bedroom house isn’t going to work for us).

“Wants” are the less strict criteria. These are things you would really like to have, but might ease up on if other factors make sense to you. Common examples of wants are types of floors, finishes, updates, paint colors, etc.

….

And that’s it! You’re ready to get out and start looking at homes!

If you’d like advice on what you should be looking for while you’re walking through a home, check out my last blog post here: 3 Things To Look For When Buying a Home

Thanks so much everyone, and happy house hunting!

** If you’re buying a home in SE Michigan and are ready to schedule your own home buying consultation, contact me directly at 248-735-7297 or at adam@dimora.com

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