Buyer's Guide

A pre-approval is different from casually estimating what you can afford. It gives you a clearer picture of your buying power and can also make your offer stronger when you find the right home.

In many situations, sellers want to know that a buyer is financially prepared before accepting an offer.

It is easy to focus on décor, paint colors, or furniture, but those things can change. During a showing, pay attention to the bigger-picture items.

Look at the roof, windows, foundation, grading, basement, mechanical systems, electrical panel, plumbing, signs of water intrusion, and overall maintenance.

You do not have to be a home inspector, but you do want to be observant.

Prequalification is a great start for understanding your purchasing power, but it’s not the only factor. A lender may pre-approve you for more than you’re comfortable spending, which is why the budget you compiled in step two is so important. The opposite can also happen, where you believe you can afford a certain payment every month, but the bank doesn’t agree. This often happens when you’re new to your job, have insufficient credit, or have bankruptcies or other financial issues in your history.

You’re not required to stick with this lender when you ultimately finance your purchase, but this process is a great way to vet mortgage providers. Also, a prequalification letter can make you a more competitive candidate in multiple-offer situations.

Examine your current expenses and determine how they might change if you purchase a home. Create a comprehensive household budget so you can factor in any new ongoing expenses that might come with a home purchase, such as garbage and recycling, water, or homeowner’s association fees. Once you decide how these expenses will change, you’ll be better equipped to leverage the information you get in step three.

Your agent will arrange showings of properties that meet your specific criteria and price range, taking note of your likes and dislikes to further refine their search parameters. Your agent will help you explore the details — from storage to light switches to the flow of a home — and understand the pros and cons of the options in front of you. Your agent will also help you make time to explore the neighborhood and examine elements like local traffic at different times of the day, parking options, and proximity to neighborhood amenities like schools and grocery stores.

Once you have selected the perfect home and have your finances in order, your agent will help you craft a fair offer price based on the value of comparable homes on the market. You’ll also work through details such as timing, contingencies, and fees. After your agent submits the offer on your behalf, your agent will help you negotiate counteroffers and reach an agreement with the seller. At this point, the house will go into escrow.

The appraisal ensures that you are paying a fair price for the house. Your mortgage provider will hire an appraiser to inspect the property and offer an independent opinion of its value. Sometimes, appraisals may come in too low, which can impact the amount of money the bank is willing to lend. In this case, your agent can help you determine next steps and navigate the appeal process.