Palm Beach Coastal Real Estate

How to Begin the House Hunting Process

How to Begin the House Hunting ProcessYou’ve made the decision to buy a house… Congratulations! This is a great move both financially and emotionally. Whether it’s a decent down payment, it’s time to move, if you’re tired of renting, or, it’s just that time of life, buying and owning a home is a big step, one in which everyone should enjoy and accomplish at some point in their life.

Homeownership is more than simply owning property; it’s owning a dream, not to get too gushy. But, it’s true. Owning a home means stability, investment, and protection for future wealth. Even if the housing market bounces up and down of the housing market has always been to increase. Equity builds, can be tapped into when needed, and you have the sense of owning a property that is all your own. But how do you begin the process?

Buying a home might seem scary and daunting as well as a little anxiety-inducing, but the more you know the less scary it becomes. You’re probably thinking about your finances, what type of home you want and where you want to live, which is definitely the things you should be thinking about. But it all comes down to finances. Start with your finances and the rest will naturally fall into place. So let’s begin.

How financially stable do you need to be?

If you are scraping by every single week, digging pennies out of the couch cushions to buy your daily coffee, and living paycheck to paycheck, barely making rent, now may not be the best time to buy a house. But, if you’re thinking about buying a house, you’re probably not there. Maybe you saved up a few thousand dollars for a down payment, closing costs, or an earnest money deposit. Maybe you’ve been putting money aside, scrimping and saving, not buying those expensive lattes in the morning and are ready to find something more permanent and stable.

While you don’t need tens of thousands of dollars to buy your first house, it certainly helps. However, there are a lot of different programs, grants, assistants, and creative financing that can allow homebuyers, especially first-time homebuyers, to purchase a home with as little as 3.5% down payment. Now, on a $500,000 house, that is still about $17,000, which is nothing to sneeze at. But with an FHA loan, this low-down-payment option makes it possible for a lot of first-time homebuyers to finally get into a property of your own. Once you’ve built up a nice chunk of equity, you can roll that equity into a larger down payment with a better term home loan and a bigger home later on, but for now, this may be the best option.

How to Begin the House Hunting ProcessHow much money does it really cost to buy a house?

The down payment is not the only cost homebuyers will need. The initial earnest money cost is a direct out-of-pocket good faith down payment that gets added to your down payment when you finalize the purchase showing the sellers you are serious enough to buy the property that you’re willing to put money down with your real estate offer. This is typically between $500 and up to 3% of the purchase price of the home. The higher the earnest money deposit, the more serious sellers see you.

Earnest Money

The earnest money deposit does not get deposited into an actual account or taken out of your account until the sellers accept your offer. This is called mutual acceptance. Once both parties agree to the offer, the earnest money will get deposited and credited back to the buyer at closing as part of the down payment. So, if you’re 3.5% FHA loan down payment is $17,500 and you put a $500 earnest money down payment, you’ll only need to come up with the $17,000 to finalize the rest of the down payment when the property closes.

Appraisal fees and inspection costs.

Depending on the type of home loan you are approved for, your appraisal may or may not be included in the final closing costs, which means you may need to pay directly for your appraisal. This can be upwards of $500-$800 depending on the appraisal company. The home inspection is also typically paid out-of-pocket directly to the home inspector. This can range anywhere from $300-$800.

Closing costs.How to Begin the House Hunting Process

Closing costs are those final, all-encompassing fees and costs associated with paperwork, people involved, and all the little details that go along with buying and selling real estate. These fees can be anywhere from $2000 up to $10,000 ask your lender exactly how much in closing costs fees you will be required to come up with at closing. Alternatively, some programs will allow you to blend the closing costs into the purchase price of the home increasing the actual purchase price to cover the closing costs. You are basically financing your closing costs rather than coming up with cash when you close on the property.

That is basically it. These are the fees associated with the initial purchase of a home. Of course, once you own the home, repairs, upgrades, and any maintenance is all in your court as well.

We encourage all of our real estate buyers to speak with the lender before looking at homes. This is a crucial step and there’s nothing more disappointing than looking at homes first only to discover they are out of your price range. Sit down with the lender, discuss your finances, and come up with a price range that is comfortable for your monthly mortgage payment. From there, you can limit your search criteria within your budget and start looking at homes that work for your lifestyle and your needs.


Let’s move on to making an offer on a house