Movin’ On Up…How to Navigate the Home-Buying Process - Part One

It’s officially 2020! As we welcome a new year (and a new decade), you might be thinking about new surroundings – specifically in a new home. Buying a home can be stressful, even for the most seasoned home-buyer. You’ll only purchase a home a few times during your life, and you want the experience to be positive. Keep reading because, in this post, I’m going to break down the home-buying process so you'll know what to expect every step of the way.

Determine Your Budget!

Yes, I know that I sound like a broken record. It seems like every post I publish has those three words. But, there is a good reason for that. When you know up-front how much home you can afford, you can prevent yourself from falling in love with a house that's out of your price range. I can tell you from experience that I had to reel in my husband during our first home search. It’s easy to get your heart set on a beautiful home, but sometimes, it just doesn't fit your pocketbook.

If you have no idea about the particular home that you want to buy, you can always run some numbers based on what you are looking for in a house or what homes are going for in your area. Even a ball-park estimate is a good stepping stone to becoming a prepared home buyer. You can always check out our Mortgage Calculator tool to help you estimate your payments.

Speaking of budget...there is more to the cost of a house than the selling price. Don’t forget to factor in:

• Your down payment.

• Insurance and taxes.

• HOA fees and other required community fees.

• Consider whether your property taxes will increase or decrease.

• Will you be responsible for locality fees?

• Are you moving to a new state? If so, there might be additional financial obligations to consider.

• How much money will you need at closing?

• What will your monthly payments be?

• What are the out of pocket expenses related to the listing of a home and the purchase of the new home?  There may be overlapping costs to factor in (home inspections, appraisals, termite inspections, radon inspections, etc.). You will also want to consider work that needs to be done ahead of the sale as well as repairs that the seller is not willing to cover.

• Do you have enough of a down-payment to prevent PMI? If not, you can tack on a couple hundred per month for that. You can get more info about what PMI is right here.

• Earnest money.

*Bonus Tip: Earnest money is a good faith deposit that shows intent to purchase. The amount may be a flat fee, or it may be a percentage based on the sales price of the home. Be sure to ask your agent about all of the contingencies you need to follow so that you know what happens to your money if the sale falls through.

Know Your Score

Before you start choosing paint colors, it’s important to know the ins and outs of your credit report. Be sure to pull your annual credit report from all three bureaus well in advance. This way you can address issues ahead of your purchase. Coming into a new loan with the highest score and lowest debt possible will help you “score” a low-interest rate! Need an overview of credit reports and scores? Luckily, I wrote a blog about it.

Your Real Estate Agent or Realtor®

One important decision you will make along this journey will be deciding with whom you want to work with to purchase the home. Your real estate agent is going to become like family (trust me, you’ll talk to them more than your spouse on some days), so it’s important to find the right person. This person is going to be in charge of helping you find what homes are available in your chosen location, taking you on home tours, negotiating on your behalf, assisting in the closing process, offering their expertise and sometimes just lending an ear when you need to vent.

Your agent is going to be doing a lot of work for you, and at the end of it all, you will find yourself at the closing table as the proud owner of your new house. Of course, this comes at the cost of commissions for the agents involved. Unless you love handing out stacks of cash to people (and if you do, please pay me a visit), you’ll want to make sure you get a fair deal. Commissions for both the seller’s agent and buyer’s agent are negotiable. Don’t be afraid to ask questions so that you are comfortable with the costs associated with the purchase.

You need to be able to trust your agent; one way to do that is to properly vet them. Our credit union, for instance, partners with certified agents that not only know their stuff, but they’ll also help you get more money in your pocket at closing. And, who doesn’t love a rebate? If you’re selling your home, they can help you determine the value so you get the best return for your investment.

Stay tuned for Part Two next week!

I want to hear from you! What did you think about this post? Comment below, or email me directly!

Krista Kyte is a personal finance blogger and personal banker with over 17 years of experience in the financial industry. Krista is passionate about helping our members understand their financial situations. She writes tips that will help consumers reach and maintain financial security, and start living the life they’ve always wanted.