12 Steps to Homeownership

You’re finally ready to own your home—what’s next?  

It’s imperative to understand what to expect during the homebuying process to help you prepare physically, emotionally and mentally. Not only is this one of the biggest investments you’ll make, but it’s also a huge life milestone. You may have some doubts and hesitation, but you’ll ultimately end up with the home of your dreams in the end.  

Here are the steps to becoming a homeowner. 

1. Connect

It’s likely that you’re not a homebuying expert, so connecting with both a lender and a real estate agent is one of the first items to check off your list. An experienced and professional lender will help you learn about your financing options and what you can realistically afford and guide you through the home financing process all the way through to your closing day. Your real estate agent should be knowledgeable in the neighborhood you want to buy in, know current housing market trends and help you negotiate a contract when you do find a home you love.  

You’ll also meet and work with other professionals during the buying process, including an appraiser, home inspector, insurance companies and more.

2. Get Pre-Approved

A pre-approval letter is a statement from a lender that they are tentatively willing to lend money to you, up to a certain loan amount. This will help you and your real estate agent look for properties within your budget. Getting pre-approved would also show sellers that you’re prepared, are able to get financing and are ready to put down an offer on a home. Keep in mind that your lender will look into your finances at this stage, which includes a hard inquiry on your credit report.

3. Collect and Send

A good lender will take the time to get to know you, understand your potential financing options and learn about your current and future homeownership goals. This will help them get you the best service and loan products possible. At this time, they’ll collect any necessary information and documentation to help you move along in the mortgage process.

4. The Fun Part

Once you’re pre-approved and have a finalized budget, you’ll work with your real estate agent to find your future dream home. Make sure they understand where you want to buy, your necessities, “nice-to-haves” and anything else that they should know to help you find properties that work for you. They’ll also coordinate any viewings and keep you updated on new listings that fit your requirements.

5. Advance to “Go”

Once you’ve found a property you want to make an offer on, your real estate agent will help you put down an offer, draw up a contract and negotiate the terms with the seller and seller’s agent. You’d then give the agreed-upon contract to your lender.

6. Crossing T’s and Dotting I’s

Once your lender has your contract, they’ll confirm your loan terms, out-of-pocket costs and start on compliance disclosures. You’ll be sent the formal loan application disclosures, and they’ll then request any updated documentation necessary. This may include verification of income, your tax returns, bank statements, debts and more.

7. Inspection

Your agent will help coordinate a home inspection, which includes a professional coming to the home to ensure it’s livable and doesn’t have any foundational or structural issues. They’ll look for anything that needs repairs or that’s more serious like mold or radon. Your lender will also schedule an appraisal, which helps determine the property’s fair market value and helps ensure that the lender isn’t lending you more money than necessary.

8. Verifications

Your lender will gather all your documentation and data related to the home to submit to underwriting. This team will verify all of your information to ensure you’re eligible for the home loan. At the end of this process, they will either approve or deny your application or request more information and/or documentation to help them make a final decision.

9. Conditions

After the underwriter makes their decision, your lender will reach out to you to request any more documentation needed. This would be a conditional approval, meaning your application will be approved as long as you meet certain conditions, such as more documents for verification, gift letters or letters of explanation for a large withdrawal.

10. Clear to Close

When the underwriter makes a final decision and you’re approved for the loan, you’re “clear to close.” At this point, your lender will schedule a closing date and let you know what you need to prepare for closing. At least three days before your scheduled closing date, you should receive the closing disclosure. Additionally, before or on your closing date, you’ll do a final walkthrough of the property with your real estate agent.

11. Closing

During your actual closing day, you’ll attend a closing meeting where you’ll need to provide your identification and proof of funds for your closing costs. You’ll sign paperwork, including the closing disclosure, pay your down payment and receive the keys to your new home! Keep an eye on your phone or inbox during this time. It’s common for closing days to be postponed for a short while.

12. Lender for Life

If all goes well for you and your lender, you’ll have a financing professional you can rely on for years to come. If you decide to refinance, buy a second home, invest in property or want to move in the future, you’ll be able to tap into this resource when you need them.