Becoming a homeowner is a big step toward financial independence and stability. But the process can seem overwhelming to first-time buyers. There’s just so much paperwork, real estate jargon, and financing involved.
But when you break the process down into steps, you’ll see that it’s not as complicated as you may have thought. In fact, you can become a homeowner in five easy steps.
Step 1: Get Your Mortgage Pre-Approval
If you plan to use financing for your new home, you should get pre-approved for a mortgage even before you start looking at homes.
Not only does a pre-approval tell you how much the lender is willing to loan you (which can help you decide on a price range), but it also strengthens your offer in the eyes of your sellers. Before a seller will accept your offer and take their house off the market for you, they typically want assurance that you can qualify for the funding needed to close the deal. This is especially true in hot markets like the Bay Area. Having a pre-approval letter from a lender gives your offer more weight.
To get pre-approved, you just need to complete a pre-approval application with your lender of choice and submit your financials (like pay stubs and bank statements) for review. Once your lender reviews those items and does a credit check, they’ll be able to tell you how much of a loan you can get.
Step 2: Start Your Home Search
With your pre-approval in hand, it’s time to start your home search.
It’s helpful to get a real estate agent in your corner as soon as you’re ready to look at homes. Bay Area agents understand the nuances of the local market and can provide personalized professional guidance. Experienced agents also have connections in the industry, so they often find out about new listings before they hit the market. With so much buyer competition in the Bay Area, getting a head-start on a listing could help you become a homeowner faster.
And remember, sellers pay all real estate agent fees, so it doesn’t cost you anything to hire a buyer’s agent to represent you!
Step 3: Make an Offer
One mistake many first-time buyers make is waiting. When buyers find a home they love, they often hesitate to put in an offer. And we get it; becoming a homeowner is a big deal, and first-timers are naturally nervous about taking such a big step.
But if you want to buy a home in this market, there’s very little room for hesitation. If you don’t act quickly, another buyer may beat you to it, and you could miss out on your dream home. Your buyer’s agent can help you decide how much to offer based on market data. And he or she can negotiate on your behalf to get you the best terms possible.
With your offer, you’ll need to make an Earnest Money Deposit. This deposit is used to take the house off the market and hold it for you. The amount is typically between one and three percent of the offer price) and will go toward your down payment as long as the deal closes as expected.
Step 4: Escrow
It takes a lot of administrative tasks and paperwork to become a homeowner. Most of these tasks and paperwork are completed during escrow, which is the period specifically designated for the administrative processes required to complete a real estate transaction. These processes include:
Completing a home inspection and home appraisal
Securing the mortgage loan for the buyer
Confirming clear title (meaning that the seller has the right to sell the property)
Signing lots of disclosures
Escrow typically takes somewhere between 30 and 60 days. A good buyer’s agent will keep you informed every step of the way and will coordinate with title reps, escrow agents, and loan officers to make sure your purchase proceeds smoothly through escrow.
Step 5: Closing Day!
On closing day, the home is officially transferred to your name, you get your keys, and you become a homeowner!
When you’re ready to become a homeowner, contact us. We have experienced buyer’s agents who specialize in first-time buyers. They have the knowledge and expertise to guide you through the buying process and get you into your first home.