Buyer’s Check List

Curious where to start when buying a house?

Step 1

Check your credit score

Before you permit a lender to check your credit score, you will want to do a thorough review of your own credit report.

What is a credit report? A credit report pulls data from three major credit reporting agencies: TransUnion, Equifax, and Experian. It is the report used to calculate both your FICO score and your Vantage score.

You can get free reports from all three reporting agencies, at least once each year. If you find any errors in your report, dispute them immediately so they can be resolved before you apply for financing.

What is a FICO score? A FICO score is the score lenders use to evaluate your creditworthiness. This is calculated by Fair Isaac & Co. and ranges from 350-850.

The higher your credit score, the lower the interest rate you will receive. Generally speaking, a credit score of 720 or higher will get you a good interest rate on a conventional loan, but qualification criteria depends on the specific lender.

If you are trying to improve your credit score before applying, you should understand factors that can impact your score:

  • Payment history
  • Total debt
  • Length of credit history
  • New credit
  • Type of credit

Step 2

Determine how much house you can afford.

Once you are pre-approved, your lender will tell you the maximum amount you are able to borrow by taking into consideration your annual income, monthly debts, and projected down payment amount, among other criteria.

Prioritize your wish list to fit your budget.

Once you have a rough budget in mind, make a list of must-have home features. Your price point will likely dictate the size, location, and amenities of your future home. Here are a few examples of wish list items to consider:

  • Number of bedrooms and bathrooms
  • Square footage
  • Outdoor space
  • Preferred location
  • Type of home
  • Layout, features
  • School district
  • Work commute

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Step 3

Find a real estate agent 

Most buyers find it helpful to have a professional real estate agent on their side to guide them through the process. Sellers fund the buyer’s agent commission, which makes using an agent a cost-effective option for buyers.

Here are some areas where a buyer’s agent can help:

  • Market insights: identifies home value trends, new developments, buyer demand, and overall state of the market.
  • Offer price: determines what a home is worth and recommends a competitive initial offer amount.
  • Negotiating: knows when to argue for a lower price and how to negotiate contingencies and repairs
  • Professional recommendations: provides referrals for a trusted lender, attorney, contractor, or other vendors.
  • Experience: simplifies the process by handling hiccups, staying on top of due dates, and overseeing paperwork

Step 4

Get pre-approved ✅

Unless you are buying a home with all cash, getting pre-approved by a lender will give you an official verdict on your home buying budget. In order to get pre-approved, a lender will calculate your debt-to-income ratio and assess your overall financial health by reviewing your: pexels-nataliya-vaitkevich-6863510 (1)

  • Income statements, like W2s, 1099s, rental income and tax returns
  • Assets, like bank statements and retirement accounts
  • Debts, including monthly expenses like student loans, credit cards and other mortgages.
  • Records of bankruptcies and foreclosures
  • Current rent, child support payments, alimony payments and any down payment gifts

Step 5

Start the home search

Searching available homes online is a great way to start your house-hunting process. Your agent can send you listings and schedule showings.

Try to stay flexible — you will need to adjust your criteria as your home search continues. For example, you might decide it is worth sacrificing an extra bedroom to be in your desired neighborhood. Play around with search parameters and see what your money would buy if you change your wish list a bit.

What to look for when touring homes

Once you start visiting homes in person, be sure to consider the condition of the home. Viewing the home will give you an idea as to the outcome of the eminent whole house Inspection. While touring the home, you and your agent should keep an eye out for the following:

  • Structural defects and cracking
  • Electrical issues
  • Functionality and heat retention of doors and windows
  • Roof and exterior quality
  • Floors

Step 6

Ready to Make an Offer

Once you’ve found the right home, you should make your offer based on a comparative market analysis (CMA) done by your agent. The CMA is a calculation of a home’s market value based on comparable recent sales in the same area.

Using the CMA as your baseline, your agent should help you determine a fair offer price and help you decide if you should leave some room for negotiation — this depends on the state of your real estate market.

Above and beyond the CMA, here are some other things to take into consideration when making an offer:

Closing date: When you are buying a home with a mortgage, it will take 30-45 days after the contract is executed to close on the home. When you submit an offer, you can request a later closing date to fit your moving timeline, but the seller may push back on this request.

Earnest money: An earnest money deposit is a sum of money you are willing to put down when you make your offer to show that you’re serious about buying the home. If you close on the home, the earnest money simply becomes part of your down payment. If you back out of the purchase (outside of a contingency), you will lose the deposit.

Step 7

Schedule the inspection

Your real estate agent should be able to recommend a licensed home inspector.

Usually, the inspection is scheduled within a week of the contract being signed. It is recommended that you attend the inspection, as it is a good way to get a better understanding of the inner workings of the home. Usually, your agent will attend as well. After you receive the official inspection report, you will have time to discuss the findings with your agent and decide how you want to respond to the seller.

Step 8

Secure your financingkey yellowpexels-kindel-media-7768228

Even if you have been pre-approved, you still need to take a few additional steps to officially submit the mortgage application. Once you have completed the following steps, assuming everything checks out, you should receive the “clear to close,” which means that the lender has approved your purchase.

Appraisal

Your lender will hire the appraise. Your real estate agent should work with the seller’s agent and the appraiser to schedule the appraisal. After the appraisal is complete, you and your agent will receive copies of the appraisal report, so you can see the appraised fair market value and check out the comps that were used in the calculations.

If the appraisal matches your offer price: You should be clear to close.

If the appraisal comes in above your offer price: Even better! This means not only are you clear to close, but you are purchasing the home for a price below market value, giving you instant equity.

If the appraisal comes in low: Your lender will not approve the full loan amount if you are overpaying for the property. You will need to either make up the difference between the appraised value and the offer price in cash or try to re-negotiate the offer price with the seller. If you believe the appraisal was incorrect, you can try to request a new appraisal from your lender.

Step 9

Purchase a homeowner’s insurance policy.

You will need to have proof of a homeowners insurance policy before closing. If you already own a home, ask your existing agent to help you open a new policy. If you do not own a home, shop around for a policy that works best for you.

Step 10

pexels-photomix-company-226737Closing and moving day

Many buyers choose to have a final walkthrough a day before or the morning of closing. Its purpose is to be sure that the property looks the same as when you made your offer and that the seller completed agreed-upon repairs (if applicable).

On closing day, expect to spend at least a few hours at the title company signing paperwork. You should also be prepared to bring funds to cover your closing costs, which typically range between 3-5% of the sale price.

Once the signing is complete and the sale is recorded, you will receive your keys. The house is yours!

You can now set up utilities for the new home — things like electric, cable and internet. If you are buying a condo with an HOA that covers some utility costs, double check contract responsibilities with your real estate agent.

Finally, get ready to move and settle into your new home.