The Home Buying Process: A High-Level Overview

Jason Kauffman | September 7, 2022

Before you dive into the process of purchasing a home it is important to have a basic understanding of the process so that you know what to expect. The process can be divided neatly into three different stages:

  • Prequalification and Preapproval
  • Searching for your New Home
  • Contract Acceptance and Closing

Each of these stages is important, and this guide should help you better understand each one as you begin your journey to purchasing your next home.

Prequalification and Preapproval

The first step in purchasing a home is providing your personal information to a mortgage professional so they can help you determine the best loan program for your situation. Some people choose to do this over the phone and some will opt to complete a form online.

We often get people who aren’t ready to take that first step, and that’s ok. It’s important to understand though, that there really isn’t a good substitute for taking this step. While the prequalification does include disclosing your income, debts, and assets, there is more nuance to determining loan eligibility than simply numbers on paper.

Once the prequalification information is received by your mortgage professional, they can pull a credit report, build a loan data file, and run your file through the automated underwriting system (AUS). This gives us a pretty good idea of what you would qualify for IF all the information you entered is correct.

This is a great time to have a talk with your mortgage professional about where you think your budget is from a down payment perspective and what you think you can handle as a monthly payment. You may find that what you are comfortable with is lower/higher than what you qualify for. Figuring out a generic range of purchase prices will allow you to craft your search so that you are looking at homes that are likely in your budget.

Preapproval involves going one step further. To get preapproved you will have to submit the supporting documentation that supports the data you submitted with your prequalification. This might entail paystubs, W2 forms, tax returns, bank/investment account statement, proof of identification, documentation on other properties owned, etc. Your financial picture is what will dictate the needs list. The lender may also need to perform additional verifications with your employer to get specific data on your income history. All of this supporting documentation is what will allow your mortgage professional to verify your ability to qualify for a new loan.

Read more about the differences between prequalification and preapproval here so you know what’s right for you.

Searching for your New Home

So you’re prequalified or preapproved – now it’s time to start searching for your new home. If you haven’t already done so, you should consider finding a real estate agent to help facilitate your search. Some buyers decide to go it alone, but you should read more about the perils and pitfalls beforehand.

Your agent will be able to start you on a drip of properties that meet your specifications and qualifications. As you get more familiar with the market you’re looking to buy in, it doesn’t hurt to reach out to your mortgage professional with a few addresses that are typical of your search so that they can draft up specific estimates. This will help you confirm that you are looking at the right price point and have a more refined expectation of payments.

This is also the time to begin discussions with your agent about the character of your purchase market. Is it competitive? Is it a buyer or seller’s market? What is it taking to get contracts accepted? How long should you expect to be looking?

These are all questions that will help build your knowledge and expectation as a buyer, and prepare for what’s to come.

Contract Acceptance and Closing

Congratulations, your offer has been accepted and you are under contract to purchase your new home! There are still hurdles to get past before you officially own your new home. Getting your new home loan fully approved is one of those hurdles. The loan process looks similar to the preapproval process but has more moving parts. There are also potential obstacles outside of the loan process that relate to the property itself.

Ultimately, if you do your research up front and find an experienced mortgage professional and real estate agent to guide you through the home buying process, everything is going to go smoothly.

Jason Blog Bio

Jason Kauffman

Jason Kauffman is one of the owners of Uptown Mortgage and a licensed mortgage originator. He is a veteran in the mortgage industry with over 20 years of experience helping people get financing on their homes. The same experience that he brings to his clients is what he brings to the mortgage content that he produces. His goal is to help educate current and prospective homeowners on subjects that are relevant to the homebuying process.

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