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What to expect when you put an offer on a house.

Buying a home can be both exciting and overwhelming. You’re about to be a homeowner — and take on a big responsibility. But it’s also probably the biggest purchase you’ve ever made, and it doesn’t help that the process of buying a home is confusing and kind of intense.

To help you prepare, we’ve put together a basic overview of the steps to buying a home. Every home-buying experience is different. We recommend consulting your mortgage lender and real estate agent for customized advice, read documents closely, double-check numbers and rely on your best judgment throughout.

1. Save some extra cash for up-front expenses - beyond a down payment

In addition to the down payment, you’ll need funds to cover a few other immediate costs such as moving expenses, furniture and paint. When you make an offer, you’ll also make an earnest money deposit. The amount of the deposit is typically 1–3% of the price you’ll be offering for the home. 

2. Get preapproved

A preapproval is an estimate of what you could potentially borrow, based on your credit, income and a few other factors. Before you start looking for a home, your lender can provide you with loan preapproval letter. In a competitive housing market, sellers tend to give preapproved buyers first consideration because credit has been verified. You can be preapproved for a certain amount, but that doesn’t mean that you have to borrow your maximum. You should talk to your lender about the preapproval process to get more information.

3. Find a real estate agent

It’s important to find a professional to help you find homes in your price range and to assist you with the process. 

4. Determine the offer amount

There are several factors that go into determining your offer amount, including what other homes in the area have recently sold for, how eager the owner is to sell, and if other buyers are interested. A recent trend among homebuyers to make sure they win the bid on the house they want is to offer more than the listing price. If this is your strategy, make sure you can afford the extra money along with expenses that come with buying a home.

5. Put together the offer letter

The offer letter is a legal contract your real estate agent can help you draft, and it’s called a Residential Purchase Agreement (RPA). With it, you formally indicate your interest in buying the property and outline your requirements for the sale to go through.

6. The seller accepts, counters or rejects the offer

If they reject it, don’t take it personally. The price may have been too low, or they may have already decided to sell to another bidder. If they counter your offer, they’ll tell you what details in your offer they’d like to negotiate. Usually this happens after a home inspection, and you may either accept their counteroffer or you can adjust your bid to begin the negotiation process. If they accept your offer, they’ve accepted your price and terms. You would then submit the earnest money deposit check.

7. Financing, appraisal and inspection

Once your offer is accepted, it comes time to make sure the house is a sound investment and that you can get a mortgage that works for you. During this stage, you’d work with your lender and real estate agent to work through your mortgage application, appraisal and inspection.

    Applying for your mortgage
  • Even if you’ve been preapproved, you’ll need to complete your mortgage application to be approved for your loan. Your lender will ask to see paystubs for the past 30 days, your W2s from the past two years as well as any asset statements (bank statements, retirement accounts, etc.) They may also look at your credit again to make sure you haven’t made any recent, large purchases. 

Your lender then will provide a loan estimate document. This outlines the loan amount, interest rate, estimated monthly payments, closing costs and several other details. As part of your mortgage application, your lender will also order an appraisal to assess the value of the house.

    Appraising the value
  • Your lender will hire the appraiser. They will estimate how much the home is worth based on its condition, location and attributes; what similar homes have sold for; market trends; and other factors. The appraisal tells the lender how valuable the property is, which helps them determine how much to lend you. They want to make sure they’re not putting up more money than the house is worth.

    Inspecting the home
  • While your lender coordinates the appraisal, you would be responsible for hiring an inspector. You can get recommendations for a good inspector from friends or family members or do online research for well-reviewed professionals in your area.

  • The inspector investigates potential issues with the home. This includes assessing the integrity of the home’s roof, foundation, electrical system and more. If they find a significant problem, you can ask the seller to make essential repairs. 

8. Close on your new home!

Once your financing is finalized, any required repairs are made and the lender and title company have completed their paperwork, it’s time to close. You’ll receive the closing disclosure with updated information on your loan. You’ll sign final paperwork and pay your closing costs, then you’ll get the keys! 

The process to buy a home can be long and complex. It can be frustrating and stressful at times, but hopefully the steps ensure you’ve made a safe investment you feel good about. Remember to consult professionals – a real estate agent, your mortgage lender – on your specific homebuying experience to get customized advice for your situation.

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