Are you thinking of buying a home in Vermont?
If so, you’re in luck — and you have great taste. Vermont is an amazing place to live, with incredible schools, abundant natural beauty, and plenty of opportunities for outdoor recreation. Vermont also enjoys one of the lowest average unemployment rates in the country and a higher-than-average median household income.
However, getting ready to buy a home can feel like a monumental undertaking, especially if you’re a first-time homeowner. In this guide, we’ve simplified it down to 5 key steps in the home buying process, along with some additional helpful tips and tricks for first-time buyers.
So, whether you’re just starting to research Vermont home loans or you’re about to make an offer on your dream property, read on for everything you need to know!
What Are the 5 Steps in the Home Buying Process?
The road to buying your first home has its ups and downs. For the most part, though, owning a home is well worth the effort and the expense due to all the financial, social, and tax benefits of homeownership.
Let’s look at how you can get there step-by-step.
STEP 1: Get Your Finances in Order.
The first stage of the home-buying process is sometimes neglected, but it’s absolutely critical to have a simple and trouble-free experience.
In reality, with all of the free mortgage loan calculators, credit monitoring services, uniform residential loan applications, and other resources accessible online, you don’t have to walk into a lender unprepared; instead, you can simply rely on these tools to ensure that you don’t run into any unpleasant surprises.
Essentially, you are taking your own financial temperature, figuring out how much home you can afford, and deciding what you want to spend on your home — before you let someone else look through your finances for you.
Doing this step thoroughly will also save you a lot of time in future steps, like qualifying for your loan, when timing can be critical.
To get your full financial picture, gather up the following documents:
- Your Credit Score: You’ll want to know what this is for yourself and any co-borrowers.
- Proof of Income: How much do you take home each month? Each year? Pull together the past two years of W2s, 1099s, your Schedule C (if you’re self-employed), and your tax returns showing your Adjusted Gross Income. You’ll also want to collect at least one month of your most recent pay stubs and proof of any other income you’d like to have considered in your loan decision, such as child support payments, alimony, settlements, or investment returns.
- Assets & Liabilities: Finally, your mortgage lender will need to see how much you have in assets and how much you currently owe before making a home loan decision. Gather up your most recent statements for all bank accounts, investments, retirement accounts, pensions, health savings accounts, or anything else that adds to your net worth along with statements from long-term debt and revolving credit accounts (student loans, car loans, credit cards, etc.)
Once you’ve gotten all of these documents together, you’ll have a much better picture of your overall financial health, and you’ll be better able to see whether or not buying a house is a sound decision.
If you decide this is the right time to buy a home, work backward to determine how much home you can afford. Figure out how much money you have coming in from all sources each month, and multiply that number by 0.30 or 0.25 (if you want to be more conservative.)
This will give you 25% or 30% of your take-home pay; 30% of your income is the most you should spend on housing, according to financial advisors.
STEP 2: Prequalify for a Vermont Home Loan
One of the best ways to make yourself more competitive in a seller’s market and show real estate agents that you’re serious and ready to commit is to apply for preapproval with a mortgage lender.
Unlike a prequalification letter, which does not require asset verification and doesn’t give a concrete offer, a preapproval is an official offer to lend a specific amount at a specific rate. A preapproval letter can give you an edge over other buyers and make sellers take your offer more seriously.
Getting preapproved will also save you valuable time on your home search and in the underwriting and loan processing stage.
STEP 3: Find Your Team
STEP 4: Find Your Home and Make An Offer
STEP 5: Close Your New Home!
How Much Do You Put Down When Buying a House?
What Benefits Do First-Time Home Buyers Get?
How Do I Apply for a New Mortgage?
If the seller accepts your offer, you can move on to the next stage: closing. Officially, “closing on a home” means the moment the deed is recorded, and the title passes from the seller to the buyer.
However, when you hear the term closing, it generally refers to the final steps of homebuying and can take anywhere from four to six weeks. Here’s everything you can expect in the closing process.
Home inspection and appraisal
Once you and the seller reach an agreement and sign off on the final contract, it’s now time to get the home inspected and insured. You’ll also need to have an appraisal of your home, so your lender can begin processing your mortgage. This all will need to be completed before the closing date stated in your contract.
The final walk-through
A few days before the official agreed-upon closing date, it’s important to do a final walk-through of the property. This gives you the opportunity to ensure that all of your offer terms were fulfilled, especially if the seller made repairs.
If things are not in accordance with the contract, your real estate agent will address those concerns with the seller’s agent. This may delay closing and will also keep your earnest deposit in escrow until the seller addresses those issues.
The exact parties involved in your closing will depend on your specific state. Often, a third party