Buying a home may seem complicated and even a little overwhelming, but with the right information and an expert to guide you, it can be a smooth process. You don’t have to know everything before you get started – your Caliber Home Loans, Inc. ("Caliber") Loan Consultant will be with you every step of the way, explaining your options and helping to make recommendations.
In the end, buying your own home is a pretty great beginning to the next chapter of your life.
While not as fun as looking at houses, checking your credit score is a critical first step, one that allows you time to correct any errors in your credit report and make improvements in any weak areas. Can you make a substantial payment on a credit card? Do it now and your credit score may go up some before you officially apply for a mortgage.
It’s a common belief that you have to put down 20% if you want to buy a house. Saving up for a 20% down payment can be an overwhelming obstacle to many who are hoping to buy their first home. But you may not need to put 20% down – in fact, the median down payment for first-time homebuyers is only 7%.
While it’s true that some current homeowners looking to move may be able to apply funds from the sale of their previous home to their new home, they still want flexibility with the down payment. That is not a problem – there are lots of different types of mortgages with different requirements. In fact, you may be able to get a loan with only 3.5% down, or no down payment at all.
There are certainly advantages to putting 20% down on your home if you can. Your loan will cost less, you’ll be able to get a better interest rate and you won’t have private mortgage insurance (PMI) added to your payments.
When purchasing a home, think about what you want and make a list. Do you want to be close to work? A big yard? A quiet street or close to all the action? If you’re planning to buy a home with a partner, make this list together. There will likely need to be some give-and-take on which features are most important. Even if you’re buying by yourself, you may not be able to get all the features you want, so decide which ones are “need to have” and which are “nice to have.” Put your list in writing so you don’t get sidetracked later on.
Now that you know what you generally want in a home, do some browsing to see what’s out there. You’ll do more serious house hunting with your real estate agent soon, but it’s a good idea to start looking at listings online and driving through some neighborhoods. It will give you an even better idea of what you want so that you can share later with your real estate agent and loan consultant.
It’s not too soon to meet with a Caliber Loan Consultant to go over your financials and see which loan programs provide the best deal on the loan that’s right for you. Be sure to give yourself time to gather and organize your financial documents in advance of the meeting.
Your Caliber Loan Consultant will also help you get pre-approved, which will give you an even better idea of what type of home is right for you, and make your house-hunting more efficient.
A Caliber Loan Consultant will guide you through the process of getting a mortgage, but you’ll need to find a real estate agent to help you locate the right home in the right neighborhood and make an offer. You can always ask your Caliber Loan Consultant for a recommendation, as they work regularly with realtors and may know one that would be a good fit for you.
Once you find the home you want to buy, you’ll work with your agent to craft an offer that specifies the price you’re willing to pay, as well as the proposed settlement date and contingencies. Being pre-approved for a loan will help in this phase because the seller will know you’re a serious buyer who has done their paperwork.
Some home sellers simply accept the best offer they receive, but many sellers make a counteroffer. If that happens, it’s up to you to decide whether you want your agent to negotiate with the seller or walk away. This is an area where your agent can provide real value by using their expert negotiating skills to advocate on your behalf and secure the best deal for you.
If your offer is accepted, the next step will be to sign a contract. Most sales contracts include a home inspection contingency, which means you’ll hire a licensed or certified home inspector to inspect the home for needed repairs, and then ask the seller to make those repairs prior to closing. This mitigates your risk of buying a house that has major issues lurking beneath the surface, like cracks in the foundation or electrical wiring that is not up to code.
Yes, an appraisal is different from an inspection. When you offer to buy a home, you will need to have the home appraised by an independent, third-party appraiser to make sure the property value is in-line with the price. If the home appraises close to the agreed-upon purchase price, you're one step closer to closing. Occasionally, the appraisal can cause an issue if it’s appraised for more or less than the purchase price. Make sure your realtor explains the contingencies available to you, and if you can legally back out of the deal without losing your earnest money.
Closing is the event that transfers ownership of the property to you. During this period, there will be title searches, insurance and a final walkthrough of the property to ensure that it's still in the same condition as the first time you saw it.
According to the National Association of Realtors, most homebuyers see about 10 homes during a 10-week period before they’re ready to make an offer on one. And this is just the first part of buying a home.
The time it takes to close – from submitting a loan application to the actual closing event – can take many lenders a minimum of 45 days. At Caliber Home Loans, we take pride in the fact that we can provide some of the quickest closing times in the industry. Caliber has leveraged the newest technology to create a faster, easier home loan process. By using this high-tech approach, we’ve taken eligible borrowers from application to closing in record time – sometimes as little as 10 business days*.
As you’re going through this process, if you encounter issues or don’t understand something, please talk to your Loan Consultant or your real estate agent. Ask as many questions as necessary – they do this all the time and are there to advise you. Once you go through this process, step-by-step, you’ll be rewarded with your new home. Congratulations!
You’ll have the keys to your new home!
*Some loan applications are not suited for digital delivery of asset, income, employment and other documentation required for loan approval. Processing and closing times vary depending on the nature and complexity of the transaction.