Step 1: check your credit score

You can get a free credit report once a year. Go to www.annualcreditreport.com. Your credit score is an important factor in determining which loans you may qualify for with a lender. We recommend that you read your credit report and make sure that they accurate. If you find a error, you there are links on the website you can follow to contest it. 

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Step 2: debt to income ratio

Calculate your debt to income ratio (how much you earn versus how much you spend). As a general rule, it's better when your potential mortgage payments are not greater than one-third of your monthly income. It is also important to note that if you are financing your real estate purchase with a loan, you will also to calculate taxes and insurances into your monthly payments. 

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Step 3: budget for expenses

Beyond a loan, there are immediate expenses involved in purchasing real estate. Here are a few rough estimates:

• Downpayment: varies by loan

• Earnest Money: $500 to1% of purchase price usually

• Home Inspection: varies ($400-$600)

• Appraisal: varies ($400-$600)

• WDIR: varies ($85-$150)

• Closing costs: varies (2%-5% of purchase price)

Step 4: shop for a lender

It is important to explore your options. It is recommended that buyers interview three lenders. Different lenders participate in different programs and sometimes offer different loan options. It's best to do this in one day as interest rates change on a daily basis. Once you have your approval (or pre-qualification), you will have a price range for your property search. You may want to ask your lender to give you itemization of their fees, so that you can better understand your closing costs.

Step 5: start your home search

Make a list of what you want in your new home/property: location, number of rooms, square footage, yard size, garage, school district, zone, etc. Providing your realtor with a list of criteria will help them to better service you. Also, consider making a "absolutely must have" list and a "we would like but could live without" list.  Update your list if you circumstances change. For example, you may decide to buy a house a block away from the beach rather than on the beach because it is cheaper.

Step 6: make an offer

When you find the property that meets your needs, your realtor will walk you through the process of making an offer. Your realtor will also provide you with comps (a list of comparable properties that have recently sold), so that you can make an informed decision about your purchase price. Your realtor will also go over the "Contract for the Purchase of Real Estate" (aka: purchase agreement) and other paperwork, including the disclosures, waivers, and addendums (if applicable).

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Step 7: under contract

Once a Seller has accepted your offer, you will be "under contract" which means you are legally bound to the terms of the purchase agreement. You will need to satisfy all the terms and contingencies of the agreement in a timely manner. For example:

• home inspection (10 business days)

• appraisal (required for loans)

• wood destroying insect report (WDIR)

• any other terms of the contract

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Step 8: mortgage application

Time is of the essence. You must stay in touch with your lender and complete all components of your loan application. It is important that you do this in a timely manner. This process will involve several steps: providing paperwork needed for the application, appraisal, underwriting, etc. Stay in touch with your lender to make sure that you are on tract. If you have questions, your lender should be there to answer your questions. If you have a hard time contacting your lender, call your realtor. It is your realtor's job to help facilitate communication.

Step 9: shop for insurances

If you have a loan, your lender will require that you have homeowners insurance. If the property you are purchasing is in a flood zone, you will also be required to have flood insurance.

It is important to shop with different insurance companies, so that you can compare and get the best rates. There are many factors that can impact your insurance rates. Ask your insurance agents to explain the factors that impact your rate. It is their job to help you understand.

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Step 10: transfer utilities

Once you have completed the steps above, your loan has been approved, and you have scheduled a closing date, you will need to contact your utility providers to transfer the utilities into your name. The Property Conditions Disclosure Statement (PCDS) should list the utility providers by name. See list of utility providers on the resources page for contact information.

Step 11: final walkthrough

Your REALTOR® will schedule the final walkthrough for the day of or the day before you close on your purchase. The purpose of the final walkthrough is to ensure that the property has not been damaged or altered any way (for example: when the owner moved out, they may have damage part of the house that compromises the market value of the the house). The final walkthrough is also a time for you to verify that repairs agreed upon in the contract were completed. 

Step 12: closing day

After all the terms of the purchase agreement are met, you will close on your property. Usually both the Seller and Buyer will meet at the title company office (or closing attorney's office) to sign the paperwork. Because the title company (or closing attorney) is a neutral third party they are responsible for hosting the closing as well as collection and dispersing funds. Once all the paperwork is complete and funds have been dispersed, you will be a proud new property owner!