THE STEPS TO BUYING A HOME

Step 1: Establish a Budget

Even before you start searching, you should determine how much you can afford with an online tool like the a Home Affordability Calculator. Just plug in some basic information to get an estimate of how much you can spend on a home.

EXP TIP- Typically, your total housing payment (including fees, taxes, and insurance) should not exceed 35% of your gross (pre-tax) income, but it’s recommended to stay closer to 25%.

Save up for a down payment

A big part of your mortgage will be determined based on how much you pay upfront in the form of a down payment, which is typically 3.5% to 20% of the home’s final sale price depending on the mortgage program you choose.

Generally, the higher the down payment, the better the interest rate will be. If you decide to put down less than 20%, you’ll likely need to pay private mortgage insurance (PMI). Speak with your agent and lender to understand your options are determine the best down payment for you.

Don’t forget about closing costs

Closing costs are fees paid at closing and usually total 2%–5% of the final sale price. Talk to your lender to understand your exact closing costs.

Step 2: Mortgage Pre-Approval

Sellers are typically more willing to accept offers from pre-approved buyers, because it shows that the buyer has the financial resources available to make good on their offer. Get quotes from multiple lenders and go with someone reliable. Read online reviews of each lender and consider their responsiveness, transparency, and estimated closing timeline. Our in-house lender, Alliance Lending, has helped many of our clients successfully.

Apply for pre-approval

Once you select a lender, apply for pre-approval. Your lender will check your credit and ask for all of your financial documents—tax returns, pay stubs, bank statements, credit card statements, student and auto loans, etc.—to accurately assess your financial situation. Keep in mind that just because you’re pre-approved for a certain amount doesn’t mean you can actually afford that amount. Prepare your own monthly budget to figure out what you’ll be comfortable paying.

Step 3: Select an Agent

Real estate agents are licensed professionals who have access to information that isn’t open to the public. A good buyer’s agent will be an expert on the home buying process, know your area inside and out, be familiar with local listing agents, and be a skilled negotiator.

The seller pays all real estate commissions in a home sale, so working with a great real estate agent won’t cost you a thing.

USE OUR AFFORDABILITY CALCULATOR

Calculate YOUR HOME MORTGAGE

Step 4: Search for Homes

Once you’re pre-approved and have an agent, you’re ready to look for a home.

Narrow down your search

If you’re like most homebuyers, you’re browsing homes for sale day and night online. At this point, it’s a good idea to narrow down your search.

Determine your ideal neighborhoods, and make a list of must-haves vs. nice-to-haves. If you’re having a tough time narrowing down, speak with your real estate agent about what she or he thinks is realistic for your price range.

Tour homes

Take as much time and tour as many homes as you need to find the right one. Set up a time to tour homes with your agent or check online for weekly open houses that you can visit on your own. Open houses typically take place on Saturday and Sunday, between 1pm and 4 pm. If you see something you like, contact your agent immediately to talk about next steps as homes move fast in our market.

Step 5: Submit an Offer

Some sellers will have an offer-review date, while others will be open to any offers that come in. Make sure you ask your agent about this for each home you’re interested in. When you’re ready, your agent will help you determine how much to offer and which contingencies to include. To determine your initial offer price, ask your agent for a comparative market analysis (CMA). A CMA will show the list and final sale prices for similar homes that recently sold in that area. 

EXP Tip - If a home has been on the market for longer than normal, there’s usually a reason why and there may be room for negotiation. Check with your agent on the best strategy for making an offer on a home and getting the best deal.

Negotiate if needed

Counter-offers are common and should even be expected. If you end up in a counter-offer situation, your agent will help you negotiate the best deal possible. When negotiating, don’t focus only on your final offer price. Instead, look at the whole picture and consider raising your earnest money, waiving contingencies, or proposing an earlier closing date.

Step 6: Closing Escrow

Once you and the seller agree on the terms, you’ll enter the closing process, or escrow, which usually takes 30 to 45 days. You’ll likely be in very close communication with your agent, lender, and escrow agency during this time.

Closing costs for buyers

Closing costs are the lender and third-party fees paid at the close of a real estate transaction. The fees usually total 2%–5% of the final sale price.

In addition to closing costs, your lender may require that you have at least two to six monthly payments (including principal, interest, taxes, and insurance) in the bank after the closing.

Final steps in closing

Once you enter escrow, you’ll have deadlines to complete each of the following:

• Make your earnest money deposit

• Order your title insurance

• If you have a contingency, get a home inspection and request repairs

• Work with your lender to finalize your loan

• Have your home professionally appraised

• Get homeowner’s insurance

• Coordinate all of your paperwork with an underwriter

• Do a final walk-through

• Submit a cashier's check for your down payment and closing costs

• Close escrow and sign all required paperwork

If all goes well, your contingencies will be removed and your bank will get the money to the seller on time for a smooth closing.

Step 7: Get the Keys

Welcome to your new home!

Whether or not your home is turnkey ready, there might be some maintenance and remodeling you want to complete before moving in. You’ll also want to think about hiring movers, buying new furniture and appliances, setting up your utilities, etc.

You’ll pay for these after the home is yours but may want to factor them into your home-buying budget or create a separate post-move budget. If you buy with EXP, you’ll have access to exclusive offers on everything from movers to home security through our list of trusted vendors.

EXP TIP- If you’re moving into a home with a homeowner’s association (HOA), make sure you receive a copy of the rules and regulations—and read it carefully. Some HOAs have rules around what days and times you can move into your home, and whether or not you can repaint the exterior of your home.