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Determine your budget
Even before you start searching, you should determine how much you can afford with an online tool like the Zillow Home Affordability Calculator. Just plug in some basic information to get an estimate of how much you can spend on a home.
Tip - Typically, your total housing payment (including fees, taxes, and insurance) should not exceed 35% of your gross (pre-tax) income, but it’s recommended to stay closer to 25%.
Save up for a down payment
A big part of your mortgage will be determined based on how much you pay upfront in the form of a down payment, which is typically 20% of the home’s final sale price, but you can certainly buy a home with less.
Generally, the higher the down payment, the better the interest rate will be. If you decide to put down less than 20%, you’ll likely need to pay private mortgage insurance (PMI).
Don’t forget about closing costs
Closing costs are fees paid at closing and usually total 2%–5% of the final sale price.
Get pre-approved for a mortgage
Sellers are typically more willing to accept offers from pre-approved buyers, because it shows that the buyer has the financial resources available to make good on their offer.
When we meet with you we will provide you with a list of lenders we recommend in your area.
Apply for pre-approval
Once you select a lender, apply for pre-approval. Your lender will check your credit and ask for all of your financial documents—tax returns, pay stubs, bank statements, credit card statements, student and auto loans, etc.—to accurately assess your financial situation.
Keep in mind that just because you’re pre-approved for a certain amount doesn’t mean you can actually afford that amount. Prepare your own monthly budget to figure out what you’ll be comfortable paying.
Tip: Once you’re pre-approved, don't make any big purchases or life changes, such as quitting your job or buying a car, that could negatively affect your credit score.
Hire Our Team
The Homes North of Boston Team at Colwell Banker. Real estate agents are licensed professionals who have access to information that isn’t open to the public. We are experts on the home buying process, know your area inside and out, are familiar with local listing agents, and are trained skilled negotiators.
The seller pays all real estate commissions in a home sale, so working with a great real estate agent won’t cost you a thing.
Avoid dual agency
Dual agency occurs when the listing agent selling a home also serves as the buyer’s agent. Would you go to court and elect to use the opposing client’s lawyer? Probably not, and it is the same in real estate. We do not practice dual agency.
Start looking at homes
Once you’re pre-approved and have met with us for your buyer consultation, you’re ready to look for a home.
You will benefit from our buyer consultation
A buyer consultation with our Realtor® team will transform your search. The consultation is custom designed for you and your needs. We will review the purchase process, give you a ton of buying tips and come up with a winning game plan. Whether you are a first time buyer or long-term homeowner, you will benefit from our meeting.
Narrow down your search
If you’re like most homebuyers, you’re browsing homes for sale day and night. At this point, it’s a good idea to narrow down your search. Determine your ideal neighborhoods, and make a list of must-haves vs. nice-to-haves. If you’re having a tough time narrowing down, ask us about what we think is realistic for your price range.
Tip - Once you have selected us as your agent, be sure to tell the listing agent at an open house but avoid sharing any additional information that could affect negotiations. Don’t give the impression that you want to make an offer or discuss any details about how much you can afford, how quickly you wish to buy, etc.
Make an offer
Some sellers will have an offer-review date, while others will be open to any offers that come in.
When you’re ready, we will help you determine how much to offer and which contingencies to include. To determine your initial offer price, we will provide you with a comparative market analysis (CMA). A CMA will show the list and final sale prices for similar homes that recently sold in that area.
Tip - If a home has been on the market for 20 days or more, ask us about making an offer at list price or under.
Once you submit your offer, the seller will review it with their agent and accept, decline, or submit a counteroffer.
Negotiate if needed
Counter-offers are common and should even be expected. If you end up in a counter-offer situation, we will help you negotiate the best deal possible.
When negotiating, don’t focus only on your final offer price. Instead, look at the whole picture and consider raising your earnest money, waiving contingencies, or proposing an earlier closing date.
Once you and the seller agree on the terms, you’ll enter the closing process which usually takes 40 to 60 days. We will be in very close communication with you and your lender during this time.
Closing costs for buyers
Closing costs are the lender and third-party fees paid at the close of a real estate transaction. The fees usually total 2%–5% of the final sale price.
Final steps in closing
Once your sign your Purchase and Sale (P&S), you’ll have deadlines to complete each of the following:
• Make your earnest money deposit (P&S Deposit)
• Work with your lender to finalize your loan
• Your home will be professionally appraised
• Get homeowner’s insurance (ask us for a recommendation)
• Submit all of your paperwork in a very timely fashion with the lender so it can get submitted to the underwriter
• Do a final walk-through the morning of the closing
• Submit a cashier's check for your down payment and closing costs
• Attend closing and sign all required paperwork
If all goes well, your appraisal will come in at or above purchase price, your contingencies will be removed and your bank will deliver the money to the seller on time for a smooth closing.