The 5 Steps to Buying a Home and How the Process is Changing
Home ownership has been and, likely, always will be the American dream. It’s also likely the biggest purchase that you’ll make in your life. The basics steps to buying a home have been the same for years, but technology is rapidly changing the details of the process. I’m really excited to partner with Chase, a frontrunner in helping to make the home buying experience easier during this busy real estate season.
Chase recently released a national survey, “Insights from the Mind of the Modern Homebuyer,” which found that technology is shifting the way that we buy our homes. You can read the results of the survey here, but I’ll hit the highlights below.
The most surprising finding was that 3 in 4 homeowners don’t plan to stay in their homes long term – which suggests that people are interested in upgrading as their situation changes. That’s a drastic change from the way the previous generation (and me!) viewed a home as a place to settle in for life.
There are five steps to home buying that will make the process easier, most of which you can use technology to help with.
Prep your credit.
Check your credit score and credit report for inaccuracies. The earlier you do this before you start looking at homes the better because you’ll have time to fix inaccuracies and improve your report. You can do this easily now with websites like Credit Karma or Credit Sesame or at annualcreditreport.com.
Get a budget in place and working. Calculate how much house you can afford including closing costs, down payment, and appraisal and inspection. You can find a mortgage affordability calculator at Chase to help you.
Find the right real estate professional and a lender to help you select the right home and the right mortgage for your unique situation. Check reviews before choosing and meet with them over the phone or in person with a list of questions. Look for someone who takes your questions seriously, demonstrates knowledge of the process and personalizes their answers to your unique situation. You can talk to a mortgage lender at Chase to determine the mortgage that’s right for your situation.
Start with the lender so you can get prequalified, which is helpful for the real estate professional to have as they book appointments to look at houses.
Now is also a good time to talk to your lender about the different mortgages available to you, whether there are grants that you would be approved for, and the amount of money you would need at closing. You can compare fees and make a decision at this point.
Make sure that you ask for the total amount of money needed (including things like real estate agent fees, inspection, appraisal and closing costs) so that you aren't surprised.
Also ask when the total amount of money would be needed, since you’ll need to have the money in your account about two weeks before the closing date in most cases.
Both the lender and the real estate professional are paid when you buy your home, not before, so you won't need to pay them upfront. If you decide not to purchase a house after all, then you won't be paying them.
This is one of the only steps that technology hasn't changed that much. In fact, 73% of Americans agree that they would want to meet with a mortgage professional as they consider financing options and 77% also feel that a real estate agent is essential.
Find your home.
Make a list of what you want your home to have. List everything from ample parking to a soaking tub. Prioritize your list and set a “must have” limit. Start looking at the homes that are available in the areas you’re interested.
It’s never been easier to find tons of homes and compare their features and price easily using apps like Redfin and Zillow. You no longer need to wait for your real estate professional to send you available homes. In fact, Chase found that 68% of Americans start the search on their own (45% using a computer, 13% using a mobile device, and 11% using a newspaper or magazine).
Look for the historical value of the homes in the area (which you can do easily now on apps like Zillow) but understand that you can't predict the future with accuracy. Despite that, Chase found that Americans are optimistic about the value of their home and are seeing the value in reinvesting in their homes. In fact, Chase’s survey shows that 38 percent have used or are considering a Home Equity Line of Credit in the next five years, with the majority (58 percent) putting it toward home improvements.
Buy your home.
Your real estate agent and lender will walk you through this process, but there are a few things you should keep in mind. You’ll need a “money in earnest payment” at the time you sign a contract on the house. This is usually a small percentage of the home price (about 1%) but can vary based on your market. Most contracts are written so that if your financing falls through, then that money would be returned to you. Depending on when you close, you’ll likely skip a month of mortgage payments as the new loan goes through.
Once you get through closing, then the real fun starts… moving! And moving makes the process of buying the home seem easy in comparison!
Buying a home has changed a lot over the years, but it’s still one of the most important (and stressful) moments of your life. We all know that planning for, and meeting financial goals — including buying a home — isn’t always easy. Chase is committed to helping people be in control of their finances no matter their stage in life
To begin your journey to the front door, I’d encourage you to visit Chase where you can also find out more on the survey and homebuying tools and tips.