First-time homebuyer roadmap: 5 key stages
Are you dreaming about buying a home this year? It's not too soon to start planning. To help guide you on your way, we've divided up the home buying process into five basic stages.
Stage 1: Getting ready to buy
Preparation is key before you start looking for a home.
- Learn about home buying. There are many online resources to help you explore the process of buying a home and understand the costs involved.
- Assess your savings. How much do you have for a down payment and closing costs? If you haven't already, start saving. You can also explore programs for first-time homebuyers on the Bank of America Down Payment Center.
- Review your finances. Check your credit score and request your free credit reports to be sure there are no errors. The better your credit, the better your chance of getting a mortgage.
- Estimate what you can afford. Setting a budget before you look for a home will make it easier to focus your home search.
Tip: If you're ready to buy and close on a house in 90 days, consider getting preapproved so that you can see what you can afford.
Stage 2: Beginning the home search
A little research and some help from a pro can help you find a home that's right for you.
- List your needs and wants.Footnote2 Needs are must-haves such as keeping your kids in the same school district or having a back yard for your dog. Wants are nice-to-haves that you could do without. Knowing the difference can help you stay on budget.
- Explore homes online. It's easy to look at lots of homes online, and it's a great way to get a feel for the types of homes and price ranges in your area. Once you choose an agent, they can help focus your search.
- Choose a real estate agent. A seasoned buyer's agent will know the local market and help you find a home, negotiate an offer and complete paperwork. In most cases, their commission will be paid by the seller, not by you.
Tip: When choosing an agent, you can get recommendations from family and friends — or get connected now with an agent on Bank of America's Real Estate Center so you can start looking now.
Stage 3: Making an offer on a home
You've done your homework, you and your agent have toured many different homes, and you think you've found one that fits both your needs and your budget. Time to take the plunge and make an offer.
- Get preapproved, if you haven't already. Getting preapproved can help make your offer stronger. Preapproval requires more documentation than prequalification, but it can also speed things up after your offer is accepted.
- Work with your agent to submit the offer. Your agent will help you decide on a fair price and include contingencies that will protect you if the home inspection finds serious problems.
- Write a check for your earnest money. Earnest money, also called a good faith deposit, is money you put down to show you're serious about buying the home. It’s generally 1% to 4% of the home's value, and is held in escrow until closing, when it can be applied toward your down payment and closing costs.
- If the offer is accepted, notify your lender immediately. If you're already preapproved, they can get to work on finalizing your loan.
Tip: If the offer isn't accepted, you can either increase your offer or continue your home search. Be persistent! You may have a few disappointments before final success.
Stage 4: Finalizing your loan and getting ready for closing
Once your offer has been accepted, there are still a lot of details to work through, but the finish line is in sight!
- Complete any additional mortgage paperwork. Your lender will also schedule an appraisal to confirm the home is really worth the amount you'll be borrowing. Respond quickly to any document requests to avoid delaying your closing.
- Order a home inspection. An inspection will reveal hidden problems and items that need repair. If the inspector does find issues, your agent can help negotiate with the seller to have them repaired.
- Purchase homeowners insurance. This is required and should be effective as of the date of your closing.
Stage 5: Attending your closing
As you prepare for closing, be sure to avoid anything that could affect your credit and cause issues for your lender, such as making major purchases, opening or closing credit accounts, or changing jobs.
- At least three days before, you'll get the closing disclosure from your lender. Check all details carefully and compare them to the loan estimate you got when you originally applied.
- Be sure to bring a photo ID and a cashier's check or wire transfer for any down payment or closing costs that are due.
- Read all paperwork before signing. Then get the keys to your new home!
It might seem like a long process, but taking it step-by-step makes it easier to become a homeowner — and I'm here to help.
A note from your lending specialist
I'm here for you as you begin exploring the path to homeownership. Visit my website for tools, calculators, articles and more, or contact me, and I'll review the process with you.
1 Prequalification is neither preapproval nor a commitment to lend; you must submit additional information for review and approval.
2 Final loan approval is subject to satisfactory appraisal and title review and no change in borrower credit and financial condition. Preapproval is subject to terms and conditions and timely submission of required documentation; ask your Lending Specialist for details. Preapproval does not commit to the continued availability of the loan program. The interest rate shown in a preapproval is based on our current pricing and is not locked. You may choose to lock an interest rate after we receive the complete and executed purchase contract. Borrower must submit purchase contract within 90 days of preapproval. If the rate at time of lock is higher, or a rate lock expires prior to funding, or for adjustable-rate loan programs when the index value rises, we must determine your ability to repay the loan at the higher rate, which may lower the loan amount or invalidate the preapproval. Not available on all loan products. Not available on refinance loans.
MAP6170248 | 01/2024