Buying a new home is an incredibly exciting event. But the process leading up to it can be long and complicated.
It’s important to understand every step of the home buying process before you get too far along. That way, you can be sure you have all of your bases covered and everything in order before you start looking at homes.
If you’re thinking about buying a home in Wyoming, here are eight steps for you to follow.
Step 1: Evaluate Your Current Financial Situation
You need to really understand your financial situation before you make the decision to buy a house. A few of the things to keep in mind are your FICO score, savings, and potential financing options.
Pull your credit report and make sure there are no mistakes. If there are mistakes, dispute them as soon as possible. The higher your credit score, the more likely it is you’ll have multiple financing options.
Determine the total amount you can afford to put down for your down payment and closing costs. Some loans require as much as 20% down, though others require much less. And there are government programs that may be able to help lower your down payment or cover your closing costs.
When you buy a home, you have to budget for more than just your monthly mortgage; there are many different costs homeowners must be prepared to cover. Things like homeowners insurance, property taxes, and general upkeep can add up. If you’re currently renting, think about whether you’re prepared to handle all of the problems you would currently call your landlord or property manager to repair.
Buying a home is more than just a monetary decision, it’s also a lifestyle choice. Even in a hot market, you’ll probably have to stay in your house at least a few years to recoup the costs of buying and moving. As a general rule, you should be fairly certain you want to stay in the home you choose for a while before you make an offer.
Step 2: Find a Great Wyoming Real Estate Agent
Every prospective buyer should work with an expert local real estate agent. An experienced buyer’s agent will walk you through every step of the buying process and save you money along the way.
The best part? The commission for the buyer’s agent is typically paid by the seller, meaning buyers get this service for free.
Having the right agent gives potential home buyers many benefits. Clever Partner Agents are full-service and provide on-demand showings so you can look at homes on your schedule.
Partner Agents can also get you money back with a $1,000 home buyer rebate. Also called a commission rebate, a home buyer rebate is when your realtor gives you a portion of their commission. You can then use this money for your down payment, closing costs, mortgage payment, or even opt to receive cash at closing.
Learn More: What Does a Real Estate Agent Do for a Buyer?
Step 3: Read Up on Local Real Estate Market Trends
What time of year buy impacts how much money you’ll spend and the type of selection you’ll have.
In Wyoming, the best time to buy depends on your priorities. If you’re looking for the lowest prices, look in fall and winter. If you want the biggest selection, look in the spring and early summer.
Even within the state, there are regional, city-level, and micro-level trends. The complexities of real estate markets are another reason to work with a real estate agent. Your agent will help you time your purchase to get the best possible price in your particular market.
The Wyoming real estate market is stable and prices are steadily increasing. The median home value in the state is $227,100, very close to the national median. Home values statewide went up 4.8% last year and are expected to increase another 2.0% in the next year.
Like all states, there are fluctuations in price based on where in the state you live. For example, Cheyenne has a median home value of $205,000, while Rawlins has a median home value of $152,100.
Learn More: Will it Be a Buyer’s or Seller’s Market in 2019?
Step 4: Get Pre-Approved for a Mortgage
You’ll need to get both pre-qualified and pre-approved for a mortgage before you actually get your loan.
With pre-qualification, a lender will give you an estimate of what you can afford to spend on a home, based on the financial information you give them.
Pre-approval, on the other hand, is a more thorough process. At this point, the lender will run your credit and figure out what amount and interest rate you can be approved. Your pre-approval will last for a set period of time (e.g., 90 days).
Step 5: Start House Hunting
After you’ve determined how much you can afford, and with your pre-approval in hand, you can finally start the fun part — house hunting. By this point, you should know exactly how much you can spend, helping you narrow down homes and areas in your price range.
Before you start looking at homes, sit down with your real estate agent. They’ll help you determine your needs, assess your priorities, and stick to your budget. Your agent will guide you towards options you can afford and that meets your priorities; it’s a waste of everyone’s time for you to look at properties that don’t suit your needs.
Your agent will probably come to you with a number of listings to consider. From there, you can decide which houses you’d like to see in person.
Learn More: Free House Hunting Checklist
Step 6: Make an Offer
After you find your dream home, you’ll want to make an offer.
This is another phase of the process that your realtor should walk you through. Local realtors understand the particulars of their local markets and can help you craft an offer that’s likely to be accepted.
Once you have a figure in mind for your offer, talk to your agent. They can tell you whether it’s reasonable and help you determine a potential closing date.
Many offers contain contingencies, or requirements that come with the monetary offer. Some common contingencies require appraisals, home inspections, or certain repairs.
Your offer should specify how long the seller has to make their decision. The seller may accept, reject, or make a counter offer.
At this point in the process, you’ll need proof that you can pay for your home; this is your pre-approval letter. You should also be prepared to demonstrate that you’ll be able to cover the closing costs and the down payment, in the event your offer is accepted.
Your agent should walk you through each step and help prepare the paperwork along the way.
Learn More: How to Make an Offer on a House
Step 7: Inspections and Negotiations
Home inspections are incredibly important for prospective buyers. If you’re taking out a mortgage, your lender will probably require a thorough home inspection. But even if you’re paying cash, you should still have a home inspection completed. Inspections can uncover serious problems, including issues with the foundation, pests, or mold.
The cost of a home inspection will depend on the type and size of the property, but home inspections typically cost between $300 and $500. The cost of the home inspection is usually paid by the buyer, but can be included in the negotiation process.
Your offer should include a limit on the amount of money you’re willing to spend on repairs. That way, if the home inspection uncovers major problems, you’ll have options. At that point, you can try to negotiate a new price for the property, pay the total or partial cost of the repairs, or walk away from the purchase.
Realtors are expert negotiators who will help you through the home inspection process and any related negotiations. An experienced buyer’s agent will know when to push back in negotiations, especially given current market conditions in your area and the level of competition you’re likely to face for the property you’re considering.
Step 8: It’s Closing Time!
Once you’ve finished negotiating, completed the inspection process, and finalized the paperwork, it’s closing time.
Closing is when you’ll pay your closing costs. In addition to your down payment, you should expect to pay around 3% of the home sale price in closing costs. For a median Wyoming home worth $227,100, that’s about $6,813.
The costs you may incur at closing include:
- Escrow for homeowners insurance and property tax;
- Loan fees and private mortgage insurance (PMI);
- Appraisal fees;
- Prepaid costs to your lender;
- Title insurance and survey fees;
- Prorated utility costs the seller has already paid; and
- Deed recording fees.
Closing costs vary in every market and situation, so a general estimate may not be accurate for your specific purchase. Your real estate agent should help you set realistic expectations with regard to what costs you can expect come closing time.