If you’re buying a home for the first time, or even for the first time in a while, it’s helpful to review the different steps and milestones you’ll need to be prepared for as you go through your homeownership journey.
Before we dig into what terms like under contract and contingencies mean, we should probably start at the beginning. These are common terms you’ll want to know when you’re looking to buy a home.
So, what do you need to do first, and where do you begin? For starters, you’ll want to enlist the help of an expert real estate professional to help you find the right home for you, and help you get an offer accepted on that home.
We’ve got you covered on what to expect from the entire process below, so keep scrolling to learn more.
Starting Your Home Search
Once you’ve linked up with a real estate agent in your area, you’ll work with them to develop a list of criteria for your home search, including establishing a budget.
Then, with their guidance, you’ll start looking for homes that meet those must-have items on your checklist. As you find homes that look like they meet most or all of your expectations, you’ll move onto the stage of going to tour them in person.
When you’re visiting potential homes, you should take notes and ask questions. It’s easy to get overwhelmed by the excitement of touring houses, but jotting down your impressions, likes, and dislikes can help you remember the details of each property. You should also take photos to reference later.
Submitting an Offer
After you find a house that you like, meets your budget, and checks off those must-haves on your wishlist, you’re ready for the next step: making an offer.
Your real estate agent will guide you through this process, helping you determine the right price and crafting an offer that suits your needs and the current market conditions.
Even if you submit an excellent offer, you should be prepared for negotiations with the seller, as they may counter your initial offer. This is all part of the process, and your real estate agent should advise you and help you during this negotiation process.
Going Under Contract
Once the seller has accepted your offer, you then officially go under contract. But what does that mean exactly?
Going under contract essentially means that both the buyer and the seller have agreed to the terms and conditions of the sale. You have both then signed a legally binding contract known as the purchase agreement or contract of sale.
Typically, upon signing the purchase agreement, you, as the buyer, are required to provide an earnest money deposit. This is a sum of money, often a percentage of the purchase price, demonstrating your commitment to the purchase. This deposit is held in an escrow account until the closing.
From there, you’ll work through your mortgage financing and any required due diligence to complete the purchase.
What are Contingencies?
Most purchase agreements include contingencies, which are conditions that must be met for the sale to move forward.
Common contingencies include a home inspection, financing approval, and appraisal. If any of these contingencies are not met, you may have the option to cancel the contract without penalty.
Some of the contingencies might be required based on the type of loan program you’re utilizing to purchase the home, too.
Your purchase agreement should outline the timeline for all of the various steps in your closing process, such as when inspections and appraisals must be completed, and the anticipated closing date. Sticking to this timeline is crucial for everyone involved in the sale to ensure a smooth transaction.
The home buying process can be daunting, but it’s important to remember that you’re not alone. There are many resources available to help you, and there are people who will help you every step of the way.
Now that you’ve got a basic understanding of the process, you’ll want to find an expert real estate agent and start looking at financing options with an experienced loan officer to help bring everything together and get into your new home!
The included content is intended for informational purposes only and should not be relied upon as professional advice. Additional terms and conditions apply. Not all applicants will qualify. Consult with a finance professional for tax advice or a mortgage professional to address your mortgage questions or concerns. This is an advertisement. Prepared 09/14/2023.