The homebuying process can be full of excitement as well as stress. You’ll encounter challenging obstacles and win victories throughout the experience. To help explain the ins and outs of homebuying, we’re providing a 5-part series detailing the steps to buying a home.
Let’s kick our series off by covering preapproval and making an offer.
Why You Should Get Preapproved
Have you ever tried to buy a soda out of a vending machine without enough quarters? Searching for a house without preapproval can conjure up the same feeling but on a much larger scale, especially if you don’t realize you’re looking at houses beyond what you can actually afford. It helps clarify your budget and keeps you from wasting time on houses that fall outside of your price range.
Preapproval also shows a seller how serious you are about your interest in their home once you’ve found a house worth pursuing. Ultimately, you want a house, and the seller wants a closed deal. Preapproval is a great first step and a positive sign for everyone involved in the selling or purchasing process.
Steps for Preapproval
Preapproval can feel tedious at times, but it’s overall a simple process:
- Complete a mortgage application with the lender of your choice and pass their initial credit check
- Provide the lender with any documentation they require, which could include:
- Pay stubs
- Tax forms
- Proof of current assets or liabilities
- Receive the lender’s decision.
Your lender will analyze the information you provide and will choose to offer or deny preapproval for you.
Determining Factors
Your preapproval hinges on how healthy your finances are. They consider:
- Employment status and history
- Current income
- Current debt
- Down payment capabilities
- Credit history and FICO score
It’s wise to get more than one preapproval from different lending companies. Doing so helps you navigate through your loan options and find the best mortgage rate available.
Making an Offer
After you get preapproval, it’s time to start house hunting. This is the fun part where you’ll explore your options and analyze the pros and cons of each home until you find the perfect one.
Once you find the right house to pursue, you’ll need to make a strategic offer. Your agent will draft the offer letter (which is also called a purchase offer, binder, or contract to purchase), using a state- and city-compliant Residential Purchase Agreement.
Offer letters can sometimes include:
- House information (address and purchase price)
- Earnest money details
- Title information
- Offer expiration date
- Projected closing date
- Contingencies
- Disclosures
Your offer is then sent to the seller’s team for review. At this point the seller can accept, counter, or decline your offer.
Offer Acceptance
If your offer is accepted, it must be made in writing; neither handshakes nor a verbal “yes” counts legally. Both you and the seller must each sign the offer agreement to make the acceptance official.
Have a Legal Team On Your Side
If you’re in the process of buying a new home, let the team at Walker, Hulbert, Gray, & Moore help you get the most out of your purchase. We will analyze your offer letter, evaluate the contingencies and disclosures, and uncover any discrepancies that may harm you in the deal.
Buying a new home? Talk to our experts today! 478-987-1415
Stay tuned for the rest of our series on the steps to buying a home:
- Steps to Buying a Home, Part 1: From Preapproval to Offers
- Steps to Buying a Home, Part 2: Three Offer Responses
- Steps to Buying a Home, Part 3: What to Do Under Contract
- Steps to Buying a Home, Part 4: The Under Contract Phase, Continued
- What to Expect on Home Closing Day