Buying a Home in the United States: Step by Step Guide

Buying a Home

How Do I Buy a Home in the United States?
- Buying a home in the U.S for citizens and for immigrants have the same baselines for the formal process of buying a home
- You do not need a green card, a certain type of visa, or even U.S citizenship to be eligible to purchase a home
- Getting a loan can be much more difficult for immigrants compared to citizens
  - Immigrants are typically marked as high risk by loan services compared to citizens financial profiles
- Buying a home is possible though, as long as you follow and complete each step required in the process
Step By Step Guide to Buying a Home
- Decide and determine how much you can afford to spend on a house
  - The first step is saving up for the down payment on the house
    - In most cases, lenders will require a 20% down payment on the home
  - For a rule of thumb, you should not search for a house that costs more than 3 times your annual income
- For your mortgage get pre-approved for credit
  - If you plan to buy your home with cash you will not need a mortgage loan, but most people are not in the financial position to do this
  - You will most likely need a mortgage to finance the purchase of your house
  - A U.S mortgage lender will look at the borrower’s credit history to determine their eligibility for a mortgage loan
  - As a non-U.S citizen, you may not have U.S credit, which makes it more difficult for loaners to analyze if you are worth the risk
  - You may need to search for a lender who will work with you and your situation, and this may add more time to getting approval for your mortgage loan (you may also pay a higher interest rate)
  - Before you begin looking for a home, you need to open a U.S bank account and credit card to start building credit
    - Report all of your income on your tax returns
      - Tax returns are used by lenders to decide how much you can afford to buy
  - To get prequalified for a loan, you will need to provide financial information to your mortgage banker (income, amount of savings, investments)
  - The lender will review this information and base how much they can lend you off this information
- Find the right Real Estate Agent
  - You’re not the one paying for an agent’s commission (the money they make off of selling a house) the sellers do, so there is no benefit in going without a real estate agent
  - Find a realtor you trust and who is showing you properties in your budget
  - If possible, find a realtor agent trained in foreign buyers, since they may be able to assist you with details such as paperwork and closing costs
  - If you are not fluent in English, find an agent who speaks your native language
- Begin shopping for your home
  - You will begin the process of home searching, which entails looking at many homes online
  - Compile a needs and wants list (needs to have two bathrooms, I want a big yard) to help narrow down your options
    - Make a list of must-have features and ask questions like
      - Do I want to live close to work?
      - How many bedrooms do I want?
      - Do I want a townhouse or condo?
  - You can set up tours of the houses you choose once you have it narrowed down with your realtor, and can view the houses in person
- Make an offer on a home you want
  - Once you choose a home that your want and can afford, you will begin working with your real estate agent on negotiating an offer
    - An offer is based on the value of similar homes in the same neighborhood
    - Offer a lower amount than the asking price, and you and the sellers will negotiate on a price of the sale
      - Often you can purchase a home lower than the asking price if you go through negotiations
    - Once you and the seller have reached an agreement on the price the house will be sold to you, the house will go into escrow
      - Escrow is the period of time it takes to complete the remaining steps in the homebuyers process
- Get a home inspection
  - A home inspection is when the property is inspected for any signs of structural damage
    - This includes damage to the interior, exterior, broken appliances, etc.
    - This home inspection will shine a light on what needs to be fixed or replaced
  - Your real estate agent will help you arrange this inspection, typically conducted a few days after your final offer being accepted by the seller
  - This home inspection will give you a chance to negotiate your offer or withdraw the offer without penalty if the inspection shows that the house has significant damage
    - A home inspection will typically cost from $300 to $600
- Secure your mortgage
  - You will complete your mortgage application in this step
    - If you are pre-approved, you will go back to your lender and inform them that you are ready to move forward on buying a home
    - If you are not pre-approved or pre-qualified this process will take longer
  - An appraisal will be ordered by your lender and you will need to sign more paperwork
    - An appraisal is an unbiased estimate of the fair market value of a home’s worth
    - This is used to ensure the amount of money requested by the borrower is appropriate
  - Your loan application will enter the underwriting stage before it is approved
    - This is the process of reviewing a loan application to determine the risk involved. This is based on your ability to repay the mortgage loan based on your employment history, assets, debts, and credit history
    - There is a range of loan programs, so choose a mortgage that fits your lifestyle and income
- Establish utilities and obtain insurance
  - Homeowners insurance will need to be purchased for your new property
    - This protects your property in the event of a fire, theft, or other liabilities that may occur
    - You can choose the insurance suggested by your lender or shop for your own
      - Some major brands for homeowners insurance are Progressive, State Farm, and Geico
  - Give utility companies who you choose to provide for your home or those who function in the area a move-in date
    - This will establish services and ensure your accounts and utilities will be up to date and functioning when you move in
- Close the deal on your new home
  - It will take around 3o days for your deal to close
    - At closing, you sign all required paperwork to complete your purchase
      - This includes loan documents
        
        Your loan will take a couple of days to be funded once the paperwork is given to the lender
  - Once the sellers receive their check and money for their house, you will be ready to move into your home