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Buying A Home in Six Easy Steps! Purchasing a home is one of those things that everyone wants to do, but very few people understand. Just like most other things, buying a home is a step by step process. American Intermutual Agency is here to break down each of the six steps to purchase your new home. Step 1: Choose a Loan/ Get Pre-Qualified When you begin the home buying process, the first step is for the buyer to find the right home loan for them. They can choose from a conventional loan or one of the three government home loans.
loan to meet their needs, the next step is to get pre-qualified. The pre-qualification process is simple and only Government-guaranteed loans requires that a loan officer and offer several benefits, which the applicant have a meeting. range from more lenient eligi- During the meeting, the applibility requirements to several cant and the loan officer will money-saving benefits. The discuss the applicant’s inFederal Housing Administra- come, assets, and debts. Based tion (FHA), the U.S. Departon that information, the loan ment of Agriculture (USDA), officer will give out a determiand the Department of Vetnation as to the loan amount eran Affairs (VA) administer qualified for by the applicant. these government-backed loans. Each one of these loans It is important to note that has incentives, which remove none of the information that some of the costs that come the applicant submitted has from the homeownership gone through the verificaprocess. tion process. Therefore, the - FHA loans offer a low amount that the applicant is 3.4% down payment requirepre-qualified for might change ment, low monthly payments, once the pre-approval process low closing costs, and a credit gets started. score requirement of 580. Step 2: Get Pre-Approved - USDA loans offer a $0 Unlike getting pre-qualified, down payment requirement, going through the pre-aplow monthly mortgage insur- proval process for a loan will ance payments, and flexible require that the applicant credit score requirements. submit documentation about their finances. The loan officer - VA loans offer a $0 will do a credit check on the down payment requirement, applicant while also verifying no mortgage insurance premi- their income and assets. ums, low monthly payments, and no prepayment penalties. Once all that information is However, each loan has its el- accessed and verified, the igibility requirements, which loan officer will determine the the applicant should research amount for which the applibefore applying for any of cant qualifies. Afterward, the them. applicant will be able to start looking for a home that they Once the applicant does their might be eligible for based research and finds the right on the amount that the loan
Step 5: Get the property Inspected/ Appraised The appraisal and the inspection are not the same, but they still must be done to determine if everything checks out with the property.
officer pre-approved them for earlier. At this time the applicant should also get a Certificate of Eligibility. Step 3: Shop for a Home When looking for a home to purchase, the applicant will do so based on a variety of factors. These include their wants and needs, as well as any requirements by their pre-approved home loans. For example, VA loans require that the property does not have any health or safety hazard concerns. Once the applicant finds a home that they like, and it meets all the property requirements for the loans, the next step will be to make an offer on the property. Step 4: Make an offer Making an offer on a property requires that the applicant and their real estate agent meet and begin the underwriting process. This process will have the lender go over the applicants’ credit history, income, cash reserves, equity investment, and financial assets. The process can take anywhere from two to ten days. Subsequently, once the underwriting process completes, and the offer is approved, the applicant must put the property through an inspection and an appraisal.
The inspector will inspect the property itself by testing its appliances as well as its electrical wiring and foundation. The inspection will be completed by an independent home inspector who will provide the applicant with a report of the property when he or she finishes their investigation. The appraiser will do a quicker inspection of the property and its amenities; however, their main concern will be determining the property’s fair market value. They will do so by checking current market trends and the sales of other similar properties in the area. Step 6: Close on the Home and Become a Homeowner Once the inspection and the appraisal finish on the property, and the underwriter approves the applicant for the loan. The next and final step will be for the applicant to close on the property and sign the loan documents turning the applicant into a homeowner. Phil Georgiades is the CLS for FedHome Loan Centers, a brokerage specializing in firsttime buyer home loans. He has been practicing real estate for 22 years. To learn more about programs available to you or apply for a home loan, click here.
