The Home-Buying Process Explained

Steps to Buying a House

Joy Bowman, Lead Buyer’s Agent, Home with Sherry Team

If buying a home is on your to-do list, whether you’re a first-time buyer or it’s just been a while, there are steps you can take now to ensure a smooth process later. In this blog post, I’ve drawn on my years of experience to pull together a home-buying checklist to help you understand and prepare for your home-buying journey.

Get Your Finances in Order

This is a biggie. I recommend starting at least 6 months before you begin your search. Start monitoring your credit score regularly, eliminate any debt you can, and make all your payments on time. Avoid opening a line of credit, such as taking out a car loan or applying for a store credit card just to get a discount! And don’t make any purchases on your existing lines of credit!

If you’re a first-time buyer, start saving for your down payment. The ideal down payment is 20 percent of the purchase price. This will allow you to avoid PMI – private mortgage insurance. That means if the home you’re purchasing is $400,000 you’ll need $80,000 for a down payment. There are both conventional and FHA loans that will allow you to go with as little as 3.5 percent down, but this will result in additional fees and costs to you. Be sure you fully understand what they are.

***TIP: Be sure that the money you’re saving toward a down payment is in an easily accessible account. Once you make an offer, you’ll need to have immediate access to those funds.***

Beyond a down payment, you’ll need to have money to cover closing costs. Your lender will provide you with a statement of these fees, but they normally range from 2 to 3 percent of the sales price. You’ll also need to have roughly $600 for an inspection and another $600 for the appraisal that your lender will require. Don’t forget moving expenses. Even if you’re moving yourself, you’ll need boxes, packing supplies, and a moving truck.

Nerd Wallet: https://www.nerdwallet.com/article/mortgages/tips-for-first-time-home-buyers

Get Pre-Approved

The right mortgage lender can save you money and will get you to the closing table on time. Interview a few lenders to determine which one offers the best programs and interest rates for your situation.  If you aren’t sure where to start, a good real estate agent will have relationships with several lenders and can connect you with the right ones.

A word of warning, the pre-approval process is time-consuming! Your lender will provide you with an exact checklist of documents you’ll need. In the meantime, here are a few of the things they're likely to request:

Don’t skip this step! What you think you can afford and what a lender is willing to lend you may not be the same amount. Save yourself the heartache of falling in love with a home you can’t afford by getting pre-approved for a loan before you start your search.

How much house can I afford? Mortgage Calculator: https://www.sherryteam.com/mortgage-calculator

Establish Your Search Criteria

Once you’re preapproved, establish your search criteria. What type of home are you searching for – condo, townhouse, or single-family home? How many bedrooms and bathrooms do you need? How close to your job would you like to be? Are schools important? Do you need a yard? A garage? Do you have a work vehicle, RV, or boat that needs to be accommodated? Are amenities important? Is walkability something you want?

Phew! That’s a lot to consider. Here’s a pro tip though, don’t confuse your needs or non-negotiables with things that would simply be nice to have. Sure, who wouldn’t like to move into a house that looked like an HGTV dream home? But you might miss out on a terrific home if your criteria are too specific.

Visit Properties

Now comes the fun part. Once your agent knows where and what you’re looking for, it’s time to set up showings. Online photos and video tours are great. Trust me, those don’t take the place of an in-person tour. You need all five of your senses – ok, maybe not taste 😜 – to determine if a house is right for you.

Can you hear road noise? Are power lines or a cell tower nearby? How is the proximity to neighbors? Does it have a funky smell? Are the rooms bigger or smaller than they looked online? Is there enough natural light? What’s the traffic like during the times you’ll need to get to work, pick up the kids, or do your shopping?

It’s a lot to consider! Luckily for you, your agent has the advantage of not being emotionally tied to the purchase. She’ll guide you toward making a good decision based on facts, not feelings. Your agent can also help you see a home’s potential and give you a general idea of project and repair costs that could turn it into your dream home.

Make an Offer

Once you’ve identified The One, you and your agent will discuss the terms of the offer you’d like to make. She’ll write it up and then present it to the listing agent. The sellers will either accept your offer as it was presented, or they will make a counteroffer in writing.

Sounds easy, right? Actually, negotiating can be the most emotionally draining part of the process. Tempers may flare or feelings get bruised, but your agent will stay above the fray. She’ll stay focused on pulling comparable sales and gathering the latest market data so the offer you present is fair and attractive to the seller.

When all parties have agreed to the terms of the offer, the offer is signed, becoming a binding contract. At this time, you’ll write a check for the earnest money. Earnest money is a deposit that shows you’re serious about purchasing the home. In Georgia, it’s generally about 2 percent of the purchase price.

Now that you’re under contract, you’re done. Right? Oh no! There’s plenty more to do.

Inspection and Appraisal

Once you have a binding contract, your agent is going to recommend you have a home inspection. This is when a qualified general home inspector walks through the home with you to uncover defects and potential issues. Don’t worry. Your agent will know several home inspectors to choose from. She’ll also go through the report with you and explain which items are inexpensive fixes versus the ones that are costly repairs.

If anything turns out to be truly worrisome, your agent may recommend re-opening negotiations to address these concerns. This could be anything from requesting a price adjustment to asking that repairs be made before closing the sale. If any of the original terms of the binding contract are changed, both the seller and buyer will sign an amendment. If you and the seller can’t reach an agreement, you may have the option to terminate your agreement and get your earnest money back.

What is Home Inspection: https://atlantahomebuilders.com/what-you-need-to-know-about-home-inspections/

In addition to an inspection, your lender will order an appraisal. A licensed appraiser will go through the home to determine its value. It needs to be equal to or more than the amount of the purchase price. If the appraisal comes in lower than the amount you’ve agreed to pay, your agent will walk you through your options, one of which may be renegotiating the price.

What is an Appraisal: https://www.forbes.com/advisor/mortgages/how-home-appraisals-work/

Complete Loan Process

Once your lender has received all the required documents and an acceptable appraisal, a clear to close will be issued. This means that the lender is ready to execute your mortgage and you can close. This is a big step. The reality of being a homeowner is now in your immediate future!  

Closing Day

Typically, the day before, or the morning of your closing, you and your agent will visit the property one final time to make sure it is in the condition you agreed upon with the seller. On closing day, you’ll need to wire the down payment and any closing costs required for the purchase. Then, it’s off to the closing attorney’s office. Get your writing hand ready! There will be several documents to sign, and you can expect it to take about an hour. If you have questions during the process, your agent will be with you. Keep in mind that the closing attorney represents the lender in this transaction.

***Important reminder: Your lender will pull a credit report the day before or the day of your closing, keep adhering to the NO NEW CREDIT PURCHASES rule until you have closed on your home.***

Home Sweet Home

Once the paperwork is signed, you’ll get the keys. And just like that, you’re a homeowner!

Purchasing a home is probably the largest single investment you’ll ever make. Involving experts – a real estate agent and a mortgage broker – at the very beginning of your process will help prevent unnecessary stress and financial mistakes. We’re talking about a lot of money. Now isn’t the time to use your best friend’s sister’s newly licensed realtor cousin to help you find a house. You need an expert. Someone who knows the ins and outs of the local real estate market.

If you have questions or think you’re ready to explore your path to homeownership, let’s talk. I’d be happy to put my expertise to work for you. Get in touch at 678.744.8206 or info@sherryteam.com.

About Joy. Over a career in North Atlanta spanning more than 2 decades, Joy has worked with everyone from first-time homebuyers to million-dollar-plus buyers. In that time, she’s seen just about everything you can imagine, (ask her about the snake . . .) At this point, nothing ruffles her feathers. Clients appreciate her unflappable nature, especially when deals get dicey. It keeps them coming back to her again and again. They trust her enough to refer her to their friends, family, and coworkers, the absolute gold standard for any agent.