Are you thinking of buying a house for the first time? Here is what you need to know about the process.
Real estate transactions and laws vary from state to state- it is important to note that this blog contains details about how to buy a house in IL- specific to the Chicago area market.
How to buy a house step by step:
- Get Preapproved- Find out how much house you can afford. What type of loan are you taking out? How much is your down payment? What will your monthly payment look like? These are all questions that will be answered once you talk to a mortgage lender and establish your budget. Ask your lender about any incentives they offer or any down payment assistance programs if applicable.
- Choose an agent - Your real estate agent should be someone you vibe with, someone you feel comfortable asking questions to, and someone who is honest and transparent about the process. Communication style is also good to consider when interviewing agents as we are all independent contractors who run our businesses differently. We all follow the same rules and regulations both locally and nationally.
- Shop for a home- Make a wish list of the things you are looking for in a home and re-evaluate it often throughout the home search process. Focus on beds, baths, and how much space you need. Other things to consider are amenities and schools. Remember there are some things you can change about a home and others you cannot. Unless your budget is unlimited, you might have to make some compromises on wishlist items. If you are having a hard time finding something you would like to purchase you can consider new construction, or consider any area of the wish list items that you could compromise.
- Offer and Acceptance- Discuss the terms of your offer such as purchase price, closing date and any other contingencies you might need. For best chances of offer acceptance, offer strong, you may only get one chance to make your offer stand out. Try to find out what terms besides price the seller is looking for. Once the offer is accepted, your initial earnest deposit money will be due. Be sure to get a receipt for your earnest money deposit and share that receipt with your lender.
- Attorney Review and Inspection Period- your attorney and the seller's attorney will propose modifications to the contract to keep you both protected. At this time you can negotiate repairs that you want the seller to fix prior to closing. It is up to the buyer and seller to come to agreement on the repairs within a specified time period. If no decision is made on repairs and buyer and seller cannot agree, the deal could fall apart. This is one reason you might see homes come back on the market in the first 10 days after offer acceptance.
- Appraisal- The lender will send a real estate appraiser to verify the purchase price. If the purchase price comes in at or above the contract price all is good. If the appraisal comes in under purchase price- the buyer and seller will have to come to an agreement on a new purchase price. If no agreement is made, the deal could fall apart.
- Clearing Loan Conditions- Be on the lookout for important emails from your lender while under contract and get any required documentation into them ASAP. Do not delay in getting documents to the lender or else your closing date could be compromised. Once you send the docs to your lender, they will send it to underwriting to be reviewed and cleared. Once all conditions are cleared, the lender will issue a final approval and the buyer is cleared to close!
- Final Walkthrough- The night before or the morning of you will do your final walk through to make sure that there was no damage done by the seller while they were moving out. This is also the last chance to make sure all necessary repairs were completed and to be sure the seller removed all their belongings. When you get to closing the attorney will ask how the final walk through went and if there are any outstanding issues that need to be addressed.
- Closing Day- the date time and location of closing will be set by the title company and your real estate attorney. The remaining down payment or final figure that you will bring to closing will come from your lender and attorney. These funds can be wired to the title company from your bank or a cashiers check can be issued and brought to closing. Any overage that is not used will be refunded back to the buyer at the end of closing. Closing can take anywhere from 45 minutes to 2 hours. At the end of closing when the lender releases the funds to the seller, you will get your keys and be all done with the process.
Have questions about the buying process? Set up a buyer consultation to talk about specifics for your home search.
Share this with someone who is looking to buy in the near future.
