First-Time Home Buying Checklist

Buying a home is a complex undertaking whether you are a first-time or a seasoned home buyer. But a first-time purchase usually comes with a steep learning curve.

One key to success during this process is organization through all stages of the home-buying process. Mistakes can lead to delays or missing out on buying your dream home.

This Findlaw article offers a checklist to help you stay on track during the entire process. It will also describe working with a real estate agent and when you might need a real estate lawyer.

The Home-Buying Process

The entire home-buying process consists of about three stages before you can take possession of your new home:

• Funding
• House-hunting
• Closing

Organizing your home-buying process into stages can help you manage the complexities of the entire process.

Funding Your First Home Purchase

Before looking for a home, you need to determine your budget. Although the rare home buyer can pay for a home in cash, most first-time buyers need a mortgage loan to achieve their dreams. Prequalification, preapproval, and a mortgage calculator are three tools that can help you determine how much home you can afford.

Many mortgage lenders and banks have mortgage calculators on their websites to help you know what you can afford. Any estimates generated by a mortgage calculator will not have a significant weight as you search for your new home. Think of this as a tool for your research purposes only.

Get Mortgage Preapproval and Prequalification

Mortgage preapproval and mortgage prequalification are two different things. For prequalification, a mortgage lender will give you an estimate based on the information you provide. The mortgage lender does not do a hard pull on your credit report; they use the information you give them to generate an estimate. A prequalification will carry more weight than a mortgage calculator but less weight than a preapproval.

When you apply for a mortgage preapproval, the bank or lender will verify all the information you provide to them, including:

• Income
• Employment
• Bank statements
• Credit report
• Credit score (also, FICO score)

The lender will use this information to confirm your creditworthiness and issue a preapproval letter, often good for 60 to 90 days. Preapproval and prequalification help you search for the perfect home because they prove to the real estate agent and the prospective buyer that you are serious about buying a home.

Get a Preapproval Letter

Your preapproval letter should have the following:

• Estimated interest rate
• Estimated monthly mortgage payments
• Estimated loan amount

Preapproval/Prequalification Checklist

Here is a checklist to help you prepare for preapproval or prequalification. The bank will likely ask for the following information:

• Pay stubs
• Tax returns
• Credit history (you can order a copy of your credit report to check your history and clear any errors)

If you are self-employed, the lender may ask for several years of documentation instead of two or three years’ worth.

Compare Mortgage Loans

Consider the different types of home loans available to you, especially as a first-time home buyer. You are not limited to a conventional loan.

Here are different types of loans or loan programs:

• Conventional loan
• FHA loans (backed by the Federal Housing Administration)
• VA loans (backed by the Veteran’s Administration)
• USDA loans (backed by the United States Department of Agriculture)

Also, check with your bank or mortgage company to determine your eligibility for special programs for first-time homeownership. Many programs offer favorable down payment requirements or assistance and mortgage rates.

Starting the house-hunting process by considering funding first gives you several advantages. First, this gives you a firm price range for houses to see and the offers you might make. Second, a preapproval letter will help you when you apply for the loan, as the lender has already confirmed your creditworthiness.

Funding Checklist

Here is a checklist of things to consider as you look for the best mortgage loan for you:

• Research the type of mortgage you want
• Speak to several different lenders and mortgage brokers to learn more
• Look for the lowest interest rate and most favorable terms
• Get preapproval for your loan

House-Hunting With Your Agent

Once you have a preapproval letter or a prequalification, you can search for a real estate agent to help you with your search. Realtors are real estate professionals who are members of the National Association of Realtors (NAR), a trade organization.

Choosing a Real Estate Agent

Although you likely can buy a house without a real estate agent, using a real estate professional to help you in your search has several advantages.

First, real estate professionals are experts in their housing market. They have access to databases and information that you don’t. Partnering with a real estate professional can gain access and an advantage. Second, their experience can help guide them through the entire process, from finding a home to closing on that home. They can help you make an appropriate offer and ensure a smooth process.

Here is a checklist of questions to ask a potential real estate professional:

• Do you have a license?
• How long have you had a license?
• Are you a buyer’s agent, seller’s agent, or both?
• Do you have any client references?
• What is your commission? Who pays for your commission?
• Do you have access to a variety of homes?
• What is your process for helping prospective homeowners?

Closing on Your New Home

The closing process is the culmination of all your efforts to find a new home. The closing process begins when the seller accepts your offer and earnest money deposit. Once the seller accepts your offer, the earnest money deposit becomes part of your down payment.

Closing Checklist

The closing process usually takes about 30 to 60 days to complete. Many buyers make an offer contingent on no unexpected issues arising during this final phase.

Here is a checklist of things to consider as you move through the closing process:

• Sign the purchase agreement
• Pick an escrow agent
• Hire a home inspector to conduct the home inspection
• Get a home appraisal (your lender should order this to confirm the home’s value)
• Hire a title company to conduct a title search and issue title insurance
• Do a final walkthrough with your real estate agent
• Review closing disclosure with your real estate agent or a real estate attorney
• Review the settlement statement to get an idea of the closing costs
• Pay the closing costs
• Move-in (after you get the keys)

Get Legal Help for Real Estate Purchases

Every home purchase is unique. If you have advanced needs or specific questions about the process, you should speak to an experienced real estate attorney. Lawyers can address many aspects of a home purchase such as contracts, contingency issues, and financial disputes.