Whether you’re a first-time home buyer or gearing up for your next big move, there are a lot of things that need to get done before you’re all settled in — and the process will surely be long and complicated.
That’s why it’s so important to do your homework beforehand and get a good understanding of all the moving parts before diving in.
We’re here to help. Here are eight steps to buying a Pennsylvania home. With this knowledge under your belt, you’ll be all set to conquer the home buying journey and find your next humble abode as stress-free as possible.
Step 1: Evaluate Your Current Financial Situation
Before you start looking up home listings online and attending open houses, take a step back and truly assess your financial stability. The last thing you want to happen is to fall in love with a home out of your price range. Save yourself the let down by knowing what you can and cannot afford right off the bat.
To know if you’re ready to buy a house altogether, make sure to check out your credit score as early on in the process as possible. It’s important to note that you will need to meet a credit score requirement of at least 620 before you can be approved for most of the home loans out there, and some lenders may even require a score of 640.
Worried your credit score isn’t high enough? Don’t panic just yet; lenders will also take into consideration your credit history, which can often work in your favor.
You’ll also want to look into your savings when venturing to buy a new home. A down payment of around 20% on a house is typically the amount required of you upfront. Remember all those years you put money aside for a rainy day? It’s about to pour, so make sure you’re covered financially for the big purchase storm.
And let’s not forget about additional expenses of being a homeowner, such as utility bills, cable, home maintenance, and countless other monthly charges. You’ll want to take added homeownership costs into consideration before committing to a new house.
It may even help to evaluate your monthly income and create a budget spreadsheet for all expected fees. This will help you decide if becoming a new homeowner is doable for you at this time, or if it’s wiser to hold off for the time being.
Step 2: Find a Great Pennsylvania Real Estate Agent
There are many key benefits to working with a top-rated, highly experienced buyer’s agent; finding one that is local to your area of Pennsylvania will make all the difference when purchasing a home. A good agent will be able to show you homes in your price range, and will know the best potential neighborhoods for you.
And as an added bonus, sellers typically pay the buyer’s agent’s commission fee. You probably didn’t expect to be hearing the word “free” at all during the home buying journey. This service is one expense you don’t have to be concerned about.
In fact, Clever Partner Agents will offer a $1k Home Buyer Rebate to buyers in Pennsylvania to help cover your closing costs.
Learn More: What Does a Real Estate Agent Do for a Buyer?
Step 3: Read Up on Local Real Estate Market Trends
When it comes to buying a home, timing is everything; and when you end up purchasing could have a huge impact on the amount you end up spending.
In the state of Pennsylvania, the median home value is currently $173,900. Pennsylvania home values have gone up 4.6% over the past year, and Zillow predicts they will continue to rise another 2.7% within the next year. The median price of homes currently listed in Pennsylvania is $215,000
These trends have a tendency to fluctuate on a regional and local level — which is another reason we stress the importance of working with an experienced, local buyer’s agent who can help you to effectively time your purchase to get the best possible price.
Learn More: Will it Be a Buyer’s or Seller’s Market in 2019?
Step 4: Get Pre-Approved for a Mortgage
At this point, you’ll be ready to start thinking about your mortgage. Getting pre-approved for a mortgage is a vital step to take before you can dive into the house hunting process.
There are many differences between mortgage pre-qualification and pre-approval. Although both processes can help you get a mortgage for your home, they are two very different things.
Pre-qualification is the part when you give your complete financial history to your lender, and is usually the first step in the mortgage process. This includes financial factors including how much money you make, how much debt you have, as well as a list of all the assets that are currently in your name.
From there, your lender will look over the information you’ve provided, and will recommend the options for the kinds of mortgages that you would qualify for.
Although they are very similar, the main difference between mortgage pre-qualification and pre-approval is that a qualified lending professional must verify all your information during the pre-approval process.
They will verify the accuracy of your income, assets, and any debts you may have. After that has been conducted, they will do a credit check to confirm your credit score. You should know this is a legitimate credit check, which means it shows up as a “hard hit” on your score.
Step 5: Start House Hunting
You’ve reached the more interesting part of the journey; it’s now time to check out some potential homes that meet your criteria within your price range. To start, you may find it helpful to create a list of priorities.
Things like the number of bedrooms needed, backyard, good size kitchen, and a designated entertainment room may be factors you need in your home. Think through your must-haves in a home before venturing out to view them in person.
While you’re at it, jot down your budget and refer back to it whenever you see a listing online that appeals to you. If it’s out of your price range, try not to give the home a second glance; no point in getting your hopes up if you can avoid it.
There is sure to be plenty of nice homes you can comfortably afford, so try doing a simple maximum price filter on your web searches to see more ideal properties.
Utilize online tools like Zillow Research, which will tell you all about a specific area. Knowing a neighborhood’s median home value, market outlook, and information on their school district will help you make a sound decision when choosing the perfect location to move to.
A local buyer’s agent will be an invaluable resource during this process; they’ve been around the block a few times and can give you solid advice on the best neighborhoods market outlooks for your areas of interest.
Learn More: Free House Hunting Checklist
Step 6: Make an Offer
By now, you’ve found your dream home in the ideal location, but you’re work is far from over. Time to put an offer on your prospective house and hope yours gets accepted.
To propose an offer, you’ll first need to call the seller’s agent or seller themselves if they are listing the home for sale by owner. Verify that they have not accepted any offers already, and ask if there are any other offers on the table at this time. If there happens to be multiple offers already in, prepare yourself for a bidding war.
Once you have been cleared to submit an offer, you will need to write a check for the earnest money required to hold your spot on that house, which is typically between 1% and 3% of the total purchase price. You can make a seller’s concession for that money back if the offer gets refused or the deal falls through.
From there, you will take your earnest money, the offer letter, and the preapproval letter from your bank letting the seller know that you are preapproved for this house, and submit it to the seller.
There’s no need to burden yourself with all the particulars of this part; an experienced agent will be able to assist you with drafting up a competitive offer letter that’s more likely to be accepted.
Learn More: How to Make an Offer on a House
Step 7: Inspections and Negotiations
If you’re interested in getting a good deal on a property purchase, you need to know as much about the house as possible. Inspectors will note any signs of peeling or discolored paint and any lead-based paint that may need to be removed. Inspectors will also check the property’s electric wiring, plumbing, and chimney condition to name a few.
Arranging a professional home inspection will not only uncover potential issues, but it could also help you land a better deal for the purchase of the property.
Experienced agents are expert negotiators and know exactly what to look for and how much to push back on. This is especially valuable when considering the current market conditions and level of competition for the particular type of home you are putting an offer on.
The law in Pennsylvania provides a uniform definition for the term "home inspection." It outlines consumer remedies as they relate to a home inspection, and establishes penalties for misrepresentations of fact in an inspection report.
Ordinary repairs do not require a permit in the state of Pennsylvania, such as new gutters, painting, or replacement of windows where the existing opening in the structure isn't altered.
Step 8: It’s Closing Time!
Once you’ve found the perfect place and agreed to a sale, you are allotted 30 days to clear your contingencies, do your due diligence, and officially close the deal. According to a recent study by Bankrate, average closing costs for a home in Pennsylvania is $1,734, which includes origination fees and third-party fees.
When purchasing a home in Pennsylvania, one of the closing costs you will incur is the Pennsylvania state deed transfer tax. The State of Pennsylvania charges 1% of the sales price and the municipality and school district usually charge 1% between them, for a total of 2%.
It is customary in the state of Pennsylvania for the buyer and seller to split the cost. 1% to buyer, and 1% to seller. However, payment is dictated by the sales contract, and some municipalities and school districts could charge more or less. It’s also worth mentioning that Pennsylvania does not have a mortgage tax or revenue stamps.
An experienced real estate agent will be able to help set accurate expectations in terms of what fees and costs to expect when closing time approaches. Clever can help.
Learn More: 4 Things Buyers Need to Know Before Closing on a House