HOW TO BUY A HOME
Buying a home is one of the most important financial decisions you’ll ever make.
We guide you through every step with expert advice, local market knowledge, and personalized support—so you can move forward with confidence. Whether you’re a first-time buyer or an experienced homeowner, our process is designed to protect your interests and simplify the journey.
STEP-BY-STEP BUYING PROCESS
Ask yourself “Why Do I want to be a homeowner?”
The first thing to do before buying a house is to consider why you want to be a
homeowner. After all, a house is a large purchase and often a long-term commitment.
Perhaps you’re looking for housing that’s in a better location for your job or family or you
need more space. For many, homeownership brings a lot of pride and joy, especially
knowing you’re building equity!
Are you ready, able, and willing?
Let’s walk through the steps of getting your finances in order before buying a home:
1) What’s your credit score?
Your credit score is one of the biggest factors that determines your home loan’s interest rate. Your credit reports determine your score—you can check your credit reports with TransUnion®, Experian®, and Equifax.
2) Try calculating your debt-to-income ratio (DTI).
Home loan lenders will also look at your debt-to-income (DTI) ratio, which should ideally be 45% or under. Lenders often look at the last two years of your work history to check that your income is stable (generally this will involve pay stubs, W-2s, and/or tax returns).
3) Your monthly Mortgage budget
Ideally, as a rule of thumb, you don’t want to spend more than 30% of your gross income on your monthly mortgage payment. What down payment and interest rate will help you stay within that guideline? Be sure to factor in the costs for homeowners insurance and property taxes. Some neighborhoods also require an HOA (Homeowners Association) fee too.
4) Upfront costs.
Set aside money for closing costs (typically 2.5%-3.5% of the home’s purchase price in Florida), and make sure your budget allows for any repairs. While it’s a good idea to save 20% for a down payment to avoid private mortgage insurance, you should have a separate savings for expenses for emergencies
Let’s look at your home loan options
Once you’ve determined you’re in a good place financially for a home loan, it’s time to speak to mortgage lenders. Check out their interest rates, mortgage products, service ratings, borrower qualification requirements, and any fees they may charge.
You’ll find a variety of home loan types that lenders will offer:
• The most common type of home loan is a conventional fixed-rate loan (requires a down payment), which allows you to plan for a consistent principal and interest payment for the life of the loan. (Keep in mind that real estate taxes,
homeowners insurance, and, if required, private mortgage insurance are also factored into your payment, and may change over time.)
• Your lender may also offer an adjustable rate mortgage with a rate that’s lower than the fixed rate offering for the first 3, 5, 7, or 10 years of your loan. Even if the rate increases in years four and five on your loan (get clarity on how much it can increase each year), it very well may be better for you to choose the adjustable-rate loan. Ask your lender to help you calculate this for your specific situation.
• Don’t think you can put down 20% of the home’s purchase price? FHA loans only require a down payment as low as 3.5%. Speak with your lender, to explore all the options that are available.
Why getting pre-approved matters.
Not only will a pre-approval letter provide you with documentation showing sellers and real estate agents that you’re serious about buying, it will also help you get a better idea of the price range you can afford. In fact, many realtors will not consider an offer without a pre-approval letter.
Most pre-approvals expire after 60-90 days, but you can provide updated information if you need a new pre-approval letter.
Keep in mind that a pre-approval is not a final loan decision. Once you’ve found a property, the lending team will request a property appraisal to ensure the property value is in line with the loan amount, and re-verify all of your paperwork one final time before closing.
Why hiring a real estate agent is a good idea.
Experienced real estate agents can help you navigate the current market, find houses in your price range with your “wants” and “needs,” negotiate with the sellers on your behalf, work through any challenges, and recommend home inspectors. Plus, real estate agents have access to a private database of properties for sale, and they can help you stress less throughout the process.
Time to go house hunting!
Making an offer on a house.
You’ll offer the seller a certain dollar amount for the house. Your real estate agent will help you prepare the offer package. Be careful to include relevant contingencies in your purchase agreement, such as the need for the house to appraise for a certain amount, for the home inspection to go well, and for your loan to be officially approved for the particular property.
In most cases, you’ll also need to provide earnest money (often 1% of the purchase price) to show you are committed to the process, which usually goes into an escrow account. Once your loan is approved, the earnest money you paid becomes part of the down payment. If you change your mind on getting the house (for a reason not listed in the contingencies), the seller could have a right to pocket the money.
Home inspections and negotiations.
A home inspection will help you and your lender decide if the house is a worthy investment. The inspector will uncover any potential major or minor issues. In some cases, you’ll be able to have the seller fix any issues on their dime, reduce the purchasing price, or purchase any warranties. Your real estate agent can help you with this process. Any major structural issues could cause the lender to not approve the loan, so it’s important that you have a home inspection contingency clause.
Complete the mortgage application process.
When you’ve found a home and made an offer, it’s time to get the final loan approval. This is a more detailed version of the pre-approval stage, where the lender will often request:
• Updated financial statements
• Appraisal
• Homeowners Insurance
With your final approval in hand, you’re ready to close on financing your new home!
Closing Day!
A few days before the closing, you’ll receive a closing disclosure. The disclosure will detail the final terms of your loan, as well as costs associated with the closing and who will pay them. This will give you a chance to review all terms and closing costs to ensure that everything is in order and you know how much money to bring to closing. On or near the closing date, you’ll usually do a walk-through of the house with your real estate agent.
Your lender will finalize the loan and provide funds to the seller. The lender is named as a lienholder on the property. Expect to sign a lot of papers, including the closing disclosure. When the loan closes, then the title of the home will officially be in your name and the property will be yours! Congratulations!