Getting pre-approved for a mortgage is one of the most important steps in the homebuying process. It shows sellers that you're a serious buyer and gives you an idea of how much you can afford to spend.
2. Down payment
The down payment is the amount of money you'll need to pay upfront for your home. The minimum down payment for a conventional loan is 3%, but you may want to put down more to avoid paying private mortgage insurance (PMI).
3. Closing costs
Closing costs are fees associated with buying a home, such as appraisal fees, title insurance, and loan origination fees. These costs can add up to several thousand dollars, so it's important to factor them into your budget.
4. Earnest money deposit
An earnest money deposit is a sum of money you'll put down to show the seller that you're serious about buying their home. The earnest money deposit is typically 1% to 3% of the purchase price and is applied to your down payment at closing.
5. Home inspection
A home inspection is a visual examination of the home's physical condition. It's important to have a home inspection done before you buy a home so you're aware of any potential repairs that may be needed.
An appraisal is an estimate of the home's value. Lenders require appraisals to make sure they're not lending you more money than the home is worth.
7. Contingency clause
A contingency clause is a condition that must be met before the sale of the home can be finalized. Common contingency clauses include home inspection contingencies, financing contingencies, and appraisal contingencies.
A counteroffer is an offer made by the buyer in response to the seller's offer. It can include changes to the purchase price, closing date, or other terms of the sale.
Closing is the final step in the homebuying process. It's when you'll sign all the paperwork and officially become the new homeowner.
Escrow is a neutral third party that holds money and documents during a real estate transaction. Escrow ensures that all parties involved in the transaction meet their obligations.
Bonus phrase: Buyer's agent
A buyer's agent is a real estate agent who represents the buyer in a home purchase. Buyer's agents can help you find homes that meet your needs and budget, negotiate on your behalf, and guide you through the entire homebuying process.