You can explore your loan choices and shop for homes at the same time. Once you’ve learned about the available options, met with multiple lenders, received a preapproval letter, and selected the kind of loan that’s right for you, there’s not much more to do in the mortgage process – until you find a home you want to purchase.
Once you have a specific home in mind, you’re ready to move on to the next phase in the mortgage process – getting and comparing specific loan offers.
What to do now
Remember your budget and priorities
As you shop for homes, you’re likely to encounter homes that you like that stretch your budget. Before you fall in love in with a home that’s more than you planned to spend, ask yourself if you can afford it and whether it’s worth it.
- Calculate the total monthly payment and update your budget to compare the impact on your budget of your target home price vs. higher-priced homes.
- Update your interest rate expectations periodically using the purchase prices and kind of loan you are considering. Rates change daily and impact the house price you can afford.
- Update your down payment and closing cost calculations as you get further into your home search.
Find the right real estate agent for you
Most people work with a real estate agent to shop for homes.
- Ask your advisors — friends, relatives, and other people you trust. They may be able to recommend a specific agent or a good method for finding one. Real estate websites can also help you find a home or connect you with an agent.
- Choose an agent that has strong experience with your preferred neighborhoods, price range, type of home, and other factors that are important to you.
- Many homebuyers feel an obligation to work with a family member or friend who is a real estate agent. Remember that buying a home is one of the most important investments you’ll make. You need to work with an agent who has the experience to do the best job, which may or may not be your family member or friend.
Research and contact closing service providers
Closing on a home involves a lot of third-party services. You can usually choose the provider for some of these servicers, and borrowers that choose their own providers often save money. But when you find the right home, things start to move fast. Now is a good time to also begin researching providers for closing services such as title insurance and settlement agents. Look ahead to learn more about closing services and how to shop for them.
What to know
When you find the right home
It’s a good idea to make your purchase offer and sales contract contingent on obtaining financing and contingent upon a satisfactory inspection. That way, if you’re unable to get a loan, or if the inspection turns up serious flaws in the home, you’re not contractually required to buy the home.
How to avoid pitfalls
Do your homework before making a final decision on a real estate agent
Ask the agent you’re considering for references. Also check your state’s licensing agency (sometimes called the Department of Real Estate) to see if there are any disciplinary actions on the agent’s record.
Know who your real estate agent represents
Real estate agents can represent the buyer or the seller, and sometimes both. State laws may require your real estate agent to tell you who they are representing and under what terms. Ask questions. Find out, for example, whether your agent will keep your conversations confidential. How would the agent or brokerage company handle the situation if you find a home you like and the agent or brokerage company also represents the seller of that home?