In 2020, 5.64 million existing homes and 822,000 newly constructed homes were sold in the US. If you’re looking to purchase a home, you’ll be met with a foreign and sometimes confusing process. Buying a new house comes with a few different steps that you should understand before jumping in.
Let’s take a look at what to expect when you want to buy a home.
Once you decide to buy a house, the first step is to get preapproved for a mortgage. A preapproval letter will show how much you are approved for and will help show sellers that you are serious about buying a home.
In order to get preapproved, you’ll need to apply with your mortgage lender. They will ask a number of questions, run a credit check, and verify your income and assets with some documentation. After this, you can start house hunting.
Finding the perfect home is easier when you have a real estate agent. They have a good understanding of the local market and can help you navigate the process to purchase a house. A real estate agent can also help you write offers and negotiate.
Once you find a home that meets your needs, you’ll need to submit an offer letter in writing. Your letter needs to include details about yourself, a deadline for the seller to respond, and how much you are willing to pay for the house.
Many times, buyers will also put down earnest money to show they are serious about the offer. If the sale goes through, it will go towards your down payment and closing costs.
From Offer to Closing
After you and the seller agree on the offer, there are still a number of steps to do. One of the most important is to get a home inspection. While a home inspection is usually not required, it is very valuable to you as a buyer.
An inspection will let you know about any possible problems with the house so you can ask for adjustments before the sale closes. If there are issues, you can have the purchase price adjusted, repairs done, or credits to cover some closing costs.
Many buyers include a home inspection contingency in the offer so they can back out of the purchase if there are major issues with the house.
If you are purchasing with a mortgage, you will be required to get a home appraisal. The lender cannot loan more money than the home is worth, so this can affect your financing. You should include an appraisal contingency in your offer.
The day before or morning of the closing, you should do a final walkthrough of the new home. This will help confirm that any repairs have been made and that the seller has moved out of the property.
When it’s time for the closing meeting, you should bring your ID, copy of your Closing Disclosure, proof of funds, and any funds you need for closing. Once you sign the paperwork and pay the down payment and closing costs, you’ll officially be a homeowner.
Know What to Expect When Buying a New House
The process of buying a new house can be a bit confusing. But if you know what to expect ahead of time, you can go through the process more confident that you’ll end up with a home you love.
If you found this article helpful, be sure to check out our other finance articles too.