so you want to buy a house...

 Photo Credit: Christopher Harris

Photo Credit: Christopher Harris

Flashback one year in the life of Brittney.  I had this grandiose idea that as an independent, financially-sound 26 year-old, it was high time for me to buy my own place.  Why not, right?  I could picture it all – a beautiful backyard for spring cook-outs and fall bonfires instead of the small apartment patio that was covered in weeds, a living room that looked like it sprang off the pages of Pinterest, and a garage that would allow me to never scrape ice off my car at 7am again. “Heaven,” I thought, “that’s what owning a home would be like.”

The only problem?  I had no idea where to start.  Spring sees a significant uptick in homebuyers in the market, and if you are one of them, you are most likely to be in the same boat as I was.  How do you find an agent?  How do you know how much you can afford?  What should you look for in a home?  Well, I am here to impart what little wisdom I have in that area.  It can be a stressful process, but if you go into it well-informed and prepared, it can be a little less hectic (and maybe enjoyable!).  So read on to learn what the basic home-buying process entails – it’s not everything you need to know, but it’s a good start.

1)      Decide What You Want

Here’s the fun, yet difficult, part.  You need to decipher what your true needs are versus your wants:  location, number of bedrooms/bathrooms, layout, etc.  Yes, I would have liked walk-in closets, but what I really wanted was to live in Broad Ripple (for those of you who don’t live in Indy, it’s a trendy area for the young adult crowd), where most homes had been built in the 20s and 30s.  And guess what?  Walk-in closets weren’t the norm back then.  So those closets went on my “want” list, along with a fenced yard, fireplace, and 2-car garage.  My needs?  Location (yes, I will admit I wanted to be close to the bars), 3 bedrooms (hello, roommates!), 2 bathrooms (also a necessity with roommates), and a basement (I have a tornado complex).  Those were things I couldn’t negotiate on, and deciding that before you go to look at homes will save you a lot of wasted time.

2)      Figure Out Your Budget

Do not get this backward, folks.  Most people decide how much they will spend on a home based on their pre-approval amount the bank provides.  This is a big no-no.  Let me repeat:  A BIG NO-NO.  You should never let someone else dictate how much you should spend on something, especially if that something is a house.  Remember the housing collapse back in ’08? Well, that’s part of how it all started – banks telling people they could afford homes they really couldn’t and the buyers just taking their word for it.  I can honestly say that I have no idea the maximum for which I would have been approved.  I figured out how much I wanted to spend per month and calculated out how much “house” I could get for that amount.  And that was my limit from the get-go.

3)      Get Pre-Approved

Figured out your spending limit? Now is the time to contact a lending institution and get pre-approved.  Basically, all this boils down to is you making a call, telling them your spending limit, and then sending in documentation regarding your pay, bank account, etc.  Being pre-approved helps you in a few ways:

  1. It tells your real estate agent that you are serious about the process (AKA making them more dedicated and helpful.)
  2. If you put in an offer on a home, it allows the negotiations process to proceed quicker.  In fact, many sellers will automatically reject an offer if the buyer isn’t pre-approved.
  3. It gives you an idea of the interest rate you will be charged (thought not necessarily the actual).  This is the reason you may want to contact a couple lending institutions – they will offer different rates and closing costs, and you should get at least a few quotes to compare offers.  Remember, they should be the ones schmoozing you!

4)      Find an Agent

This can be done before you go to the bank for pre-approval, especially if you are new to the home-buying process and would like some guidance before getting too far into the process.  My only suggestion regarding real estate agents?  Make sure you find one who has your best interests at heart.  In my opinion, referrals are really the best way to go for this – that is how I found mine, and he was great throughout the entire process.  However, you can also do a quick Google search and find loads in your area.

5)      Start Shopping!

I know what you’re probably thinking:  Finally! The fun part!  And you know, it really is.  I loved picturing my life occurring within the walls of the homes I was walking through and judging the crap out of other people’s décor choices (just being honest…you know you’d do it, too).   But it can also be extremely stressful and frustrating, especially if there aren’t many homes on the market in your price range.  So just be prepared to be in it for the long haul – some find their homes within months (like me…Hallelujah!) while for others, it takes a year or two.  Be patient, my friends!

6)      Making an Offer

Here’s where you get to try out all of those negotiation skills you’ve learned from watching 200 episodes of Shark Tank.  Before making an offer, your real estate agent will provide you with information on what comparable homes in the area have sold for.  Based on that information, you can decide what to set as your initial offer.  And don’t be afraid to ask your agent’s opinion on this – you are the ultimate deciding factor, but as a new homebuyer, it’s great to receive opinions from someone who knows the market.  More times than not, the seller will counter your offer, and this can happen one time or 10 (I seriously felt like I was playing a never-ending game of ping pong with my seller). Each time a counter is made, you will have a time limit on how long you have to accept or counter-back, and vice versa for the seller.  For me, it was usually a day or two, but this can change depending on your situation.  At the end of the madness, you will either get rejected or accepted, and if it’s the latter, then congrats! Go get yourself a beer and celebrate.

7)      Closing

Whew, you made it!  Roughly translated, closing means “to suffer a hand cramp from signing your life away” – truly, that’s all it is.  Mortgage documents, land titles, etc. – you just sign, sign, sign.  This is also the day you pay closing costs and your down payment – so yes, if you are like me, you are then considered poor again.  Good news at the end of the day, though:  you’re officially a homeowner, and you walk away with the keys to your dream (or at least “dream for now”) home.

There you have it!  Like I said, this is a very generic view of the process, but it will give you a good idea of what to expect if and when you decide to make your first home purchase.  If you have specific questions, feel free to ask – Happy House Hunting!