If buying a home is on the horizon, it’s time to start educating yourself about the homebuying process and timeline. Fortunately, there are numerous resources available to help guide service members and Veterans through the process of purchasing a property.
Knowing the steps of the homebuying process will help you proceed with confidence and minimize roadblocks. While the path to buying property will look slightly different for every individual, there are some universal stages for all homebuyers.
From the initial stage of asking yourself, “Should I buy a home now or wait?” to finally making it to the closing table, most people who purchase a home with a mortgage loan go through these steps in the homebuying process. Use this guide to help you prepare for your own homebuying journey!
Step 1: “Should I Buy a Home Now or Wait?”
Before you begin househunting or even speaking to a real estate agent, you need to determine if it’s a good time for you to buy a home. The choice of whether or not to become a homeowner while on active duty can be a difficult one.
This is because military service demands flexibility that can feel incompatible with the implied permanence of buying a home. However, with some planning and research, homeownership can offer both financial incentives and much-appreciated stability.
To reduce the stressful aspects of homeownership, it’s important for you to first decide if now is the right time for you to make such a big purchase. Will purchasing a home now come as a relief? Or will it be an added burden?
More Like This: Review To Rent or To Buy?— Questions to Ask Before Buying a House to help you decide if now is the right time for you to purchase a home.
Step 2: Get Prequalified to Buy a Home
If you’ve made it to step 2, that means you’ve decided that now is the right time to look into purchasing a home. Now, it’s important to make sure that you are financially prepared to obtain a mortgage.
You can start by checking your credit report with the three major reporting bureaus: Equifax, Experian and TransUnion. Once you receive your reports, you will have a clear view of any issues that may need to be addressed before you contact a mortgage lender.
Gather your financial information before you initiate the loan process. This will help your lender streamline the process and minimize unnecessary back-and-forth. The documents you might include are your most recent W2s and 1099s, as well as your two most recent paycheck stubs covering a 30-day period.
Your lender will let you know if they need any other information for you to prequalify for a mortgage loan. While digging up these documents can be a chore, it’s important to maintain efficient and open communication with your lender. When you’re ready to buy a home, you’ll want them to repay the favor!
Step 3: Find a Good Realtor®
Oftentimes, service members are put in a position where they have to find a home from a distance before their next PCS military move. The added challenge of being far away from their next location makes the services of a good agent even more valuable.
Conduct a bit of research on real estate agents in your next PCS area. It’s recommended that you find a real estate agent that is also a Realtor®. This status means that they have demonstrated their expertise and are backed by the National Association of Realtors.
Professional Realtors® know the ins and outs of their area and can help by matching you with homes that perfectly fit your expressed needs and preferences. Your Realtor® can also keep an eye out for properties near your next installation and may provide insider information on properties before they are even listed for the general public.
When looking to buy a home, you may consider working with the seller’s agent. However, it’s important to know that the seller’s agent is primarily looking out for the seller, not you. To make sure you’re making the best investment, it’s wise to have someone on your side who is solely dedicated to your interests during the homebuying process.
How to Find a Good Realtor® for Buying
Finding a good real estate agent is an important step to ensure a smooth homebuying experience. Here are a few tips to guide you in your search for an expert agent:
- Follow recommendations: Reach out to real estate agents who are recommended by service members from that specific area.
- Search Google: Google “real estate agents in ______” and reach out to a professional who comes with high Google ratings.
- Open communication: Once you contact a few real estate agents, take note of which agent(s) are quick to call or message back and are responsive to your questions.
- Experienced: Before you settle on one real estate agent, ask if they are experienced in working with military members or clients who are long-distance.
- Work ethic: The agent you choose should have a plan for how they are going to accommodate you being long-distance. An agent with a strong work ethic will be willing to conduct virtual tours for you and send you routine updates on new listings.
Step 4: Get Preapproved to Buy a Home
Depending on your lender, a preapproval may be only good for 30, 60 or 90 days. Once you are certain that you are ready to buy a home, allow your lender to walk you through the process of obtaining a qualifying loan amount.
If you are considering using your VA loan benefit, there are some extra steps, like obtaining a Certificate of Eligibility (COE) for VA loan. Avoid unnecessary issues by working with a loan officer who is familiar with the VA loan process.
Consider your preapproval letter to be your ticket to touring homes. This letter will prove that you have applied for a VA loan or another type of mortgage and that your income, credit and assets have been verified.
Step 5: Go House Hunting
House hunting can be both exciting and nerve-wracking all at once— there are so many decisions to make! Take a deep breath and start by identifying your baseline needs.
This list can be as basic as how many bedrooms and bathrooms you need. Or, you can get detailed by jotting down other must-haves such as having a garage, condition of the kitchen, distance from schools, etc.
More Like This: If all of the details are becoming overwhelming, review our specific Home Search Checklist! Needing more guidance on the PCS process? We’ve got you covered with the Complete 2024 PCS Toolkit.
Step 6: Obtain Funding
It’s time! You’ve found a home, and you want to make an offer. You will need to contact your lender and follow their directions to complete the loan application process. At this time, they may request additional information and documentation.
Here is what you can do to help your lender streamline the process:
- Respond immediately: As mentioned, lenders often need more information from you while your home loan is being processed. Even if it seems excessive, make sure you provide everything needed as promptly as possible.
- Minimize money movement: If you need to move money around for your home purchase, maintain specific records. Your lender may ask you to provide documentation of substantial deposits or withdrawals. To simplify the process, keep financial maneuvering to a minimum.
- A quiet credit report: Avoid making significant changes to your financial situation. Closing a credit card, making a large purchase on a credit card or running your credit to buy furniture or a car can alter your DTI (debt-to-income) ratio. This could set your lender back to step 1, costing you precious time.
- Maintain open communication: Everyone involved in the process (loan officer, realtor, borrower, etc.) should maintain open communication channels right up to closing day. Regular check-ins with these professionals will help to ensure everything is running smoothly.
Step 7: Make an Offer on a Home
Work with your real estate agent to determine the appropriate amount for your initial offer based on comparable home sales, market value, condition of the home and your closing date. Your real estate agent should handle all negotiations regarding your offer in writing.
By having all negotiations in writing, you can ensure the terms of the agreement are clearly understood by everyone involved. If there is any negotiation done verbally, make sure your agent follows up by stating the points made in writing.
Step 8: Know What Happens at Closing for Buyers
In general, the mortgage process takes between 30 to 60 days from the initial application to closing on a home. The exact timing will depend on a number of factors, including the lender’s process and any qualifying issues.
During this process, an attorney, real estate agent or title company will help negotiate and draft the contract, which is a legally binding contract between the buyer and seller describing all the terms of the transaction.
Your lender will order your closing papers, ensure that all necessary money is collected and then the funds will be disbursed. Once the deed is recorded, you can take possession of your home and move in at your convenience!
Take Your Home Search to AHRN
Homebuyers and real estate agents can both make use of AHRN’s home search resources! Military members often struggle with their home search because it can be difficult to hone in on the properties within a certain amount of miles of the base. Sign up today to gain access to new listings near your next military installation.