If you’re planning on buying a home for the first time, it can feel like an overwhelming process. No one prepares you for all the legal stuff, dealing with a mortgage broker, and closing costs.
First-time buyers often waste money because they’re unaware of the process they need to go through when buying a home.
That’s why we created this quick guide to show you the ten steps of buying a home. We’ll take the stress out of the process so you can get back to enjoying house hunting.
Choosing the right moving company is a crucial part of moving home. Make sure to check out our guide on choosing the right moving company in Boulder, CO.
6 Questions to Ask Before You Buy a House
Estate agents are legally bound to tell you the truth about a home, and their answers could make or break a deal. Here are some questions to ask before making an offer.
Why is the owner selling?
Estate agents don’t have to answer this question but might give you hints. If the owner is desperate to sell for personal reasons, they might accept a lower price. If they want to sell because the house has structural issues, you might decide to walk away.
How has the property’s value changed in the last few years?
You can look this information up online, but it’s always good to know if a house has increased in value in the last few years. If there has been a drop in value, find out why.
What is the neighborhood like?
Ask about schools, crime rates, transport links, and local amenities. Make sure to get stats for a more realistic view of the area.
Are there development plans nearby?
If you love the uninterrupted views of the nearby park, make sure there aren’t any plans for new developments that will ruin it in a couple of years.
How long has the property been on the market?
If the house has been sitting on the market for more than three months, why isn’t it selling? It could be the purchase price, area, or something wrong with the property itself.
How long have the owners lived there?
If the current owners haven’t lived there long, were they flipping the home? Perhaps there are noisy neighbors? It’s always a good sign if the owners have been in the property for years.
The Home Buying Process Step By Step
Get your finances in order
Don’t start looking through listings until you know what you can afford. You don’t want to fall in love with a place only to find out you can’t afford the monthly payments.
Start by making a full list of all of your expenses and figure out how much you can afford. Lenders will want to see proof of your outgoings, so make sure you’re in the best place to apply for a home loan.
Now is the time to cut back on unnecessary expenses, get rid of debt, and work on your credit score. The better your financial position, the easier it will be to get a mortgage approved.
Make a plan for the down payment
Most lenders will ask a home buyer for a 20% down payment for a mortgage loan. When you’ve figured out how much you can afford on your mortgage payment, make a monthly budget to save up your down payment.
Knowing how much you need to save each month will give you an incentive to cut back on expenses and reach that goal more quickly.
Find a Real Estate Agent & Solicitor
Some real estate agents are better than others, so do some local research and find one with a great track record.
Don’t forget to shop around for the best fees, too. Most real estate agents will charge around 1% for their commission, but it’s always best to research to save on fees.
A solicitor will take care of the contracts, paperwork, and legal side of the buying process. You won’t need them until after you’ve made an offer, but it’s good to have one lined up in advance.
Get a Mortgage in Principle
Many estate agents will want to see a mortgage in principle or proof of funds before they’ll let you view a potential property. This is a loan estimate to make sure you can actually afford the house you’re looking at and not just snooping around.
Your bank will be able to provide you with proof of funds if you already have the money for your new home, or you’ll be able to apply for a mortgage in principle to prove you are able to secure a home loan.
Start The Home Search Process
Now comes the fun part! Search for potential homes in the area you’re looking to move to. Make sure to use the filters on search sites to narrow down your criteria to what you can afford.
If you’re struggling to find something within your budget, widen your area search a little. You’ll be surprised by the wonderful houses you’ll find just outside of some of the most popular areas here in Boulder.
Never make an offer on a home you haven’t visited in person. If possible, visit in the day and evening to see what the property and neighborhood are like at different times of day.
Make an Offer
Once you’re happy, it’s time to make an offer. Your estate agent should be able to advise you on an appropriate offer for the property based on comps and the number of other people interested in it.
It’s perfectly fine to make a lower offer and be open to negotiation. However, if you’re looking in a sought-after neighborhood, be prepared to make an offer over the asking price.
Get a Home Inspection and Home Appraisal
Once an offer is accepted, you should organize a home inspection to make sure there are no major issues with the property. If anything is flagged, you can renegotiate the price or walk away. Either way, it’s better to avoid nasty surprises.
A home appraisal isn’t optional. Your mortgage company will need an appraisal to ensure the home is worth what you’re paying. If your buyers agent has done their job, this shouldn’t be an issue.
Get Homeowners’ Insurance
Homeowners’ insurance is also a requirement to get a mortgage approved. Without it, your mortgage lender won’t allow you to take out a mortgage on the home.
Most lenders will try to get you to take out homeowners insurance through them, but you’ll almost definitely find it cheaper by shopping on price comparison websites.
Do a Final Walkthrough
Once all the paperwork is sorted, it’s time to do a final walkthrough. This is your last opportunity to inspect your new home before closing. You’ll go through room by room and make sure there aren’t any glaring issues.
If the seller has promised to make repairs or changes, this is your chance to make sure they’ve been done as promised. It’s also important to make sure the previous owner has removed all of their belongings.
Close the deal
In this final stage of the buying process, exchange contracts, get the lease, and be given a date when you can pick up your keys and move in.
Congratulations! You’re now the owner of a wonderful new home.
Home Buying Process Checklist
Buying a home can seem like a long and complicated process, especially if it’s your first home. So you know exactly what you need to do next, here’s a quick checklist to keep it simple:
- Get your finances in order (pay off debt, cut back on expenses, record proof of outgoings, etc.)
- Save for a down payment (work out how much you need and set up a monthly payment into a savings account).
- Find the best real estate agent and solicitor.
- Get proof of funds or a mortgage in principle.
- Start your house hunt and set up viewings.
- Put an offer on a house (you might have to do this multiple times).
- Get an appraisal and inspection.
- Get mortgage insurance.
- Do a final walkthrough.
- Close the deal!
Planning on Moving to Colorado?
If you’re in the process of buying a home and you’re planning on moving here to Colorado, you’ve picked a truly great state. In fact, Colorado is ranked as one of the most popular places to live in the US. Check out our full guide on moving to Colorado for everything you need to know about your move.