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Purchasing a new home is a complicated process with a lot of moving parts. Before closing the deal, you'll have to find the right property, negotiate your offer, coordinate an inspection and iron out financing. Your plans can also get delayed or veer off course if you encounter unexpected challenges along the way.
Bringing experienced professionals onto your homebuying team can provide much-needed guidance as you navigate the tricky terrain ahead. We've put together a list of potential partners who can help walk you through your homebuying journey.
Your First-String Homebuying Team
The composition of your homebuying team really depends on your needs and unique circumstances. Here are some of the roles you'll likely want to fill.
1. A Real Estate Agent
Finding the right home is the most difficult part of the homebuying process for many buyers. Teaming up with an experienced real estate agent who knows your local market can help.
You'll share your budget and what you're looking for, then they'll send listings your way. When you find something you like, they'll communicate with the seller, make an offer on your behalf and help you negotiate the contract.
Agent fees are technically paid by the seller, but you'll ultimately shoulder the cost as they are typically factored into the cost of the home. The complexity of buying a home is such that most buyers tend to work with an agent. Trying to do it yourself could even result in overpaying for a house or missing out on a purchase due to paperwork issues.
2. A Loan Officer
Among those who bought a home in 2021, 87% financed their purchase, according to data from the National Association of Realtors. A loan officer represents the mortgage lender that creates and approves your home loan.
Getting preapproved for a mortgage is usually the first step. A loan officer can walk you through the process, answer questions and work with you when performing credit checks and verifying your income and employment. From there, you'll receive a preapproval letter that summarizes your projected loan amount and interest rate. You'll still have to complete a formal application, but preapproval clarifies how much home you can afford. Mortgage rates can vary from lender to lender, so be sure to shop around before making a final decision.
3. Your Co-Borrower
This isn't a professional member of the team, but they're important. When applying for a mortgage with another person, such as your spouse, your lender will consider both of your financial situations. This includes debts, income, employment and credit scores.
The minimum credit score for a conventional mortgage is around 620, however it could be higher. You might be able to get away with a credit score as low as 500 with an FHA loan, though it'll require a higher down payment. Your debt-to-income ratios are just as important. It reflects how much of your monthly income is going toward debt. A higher DTI may suggest that your budget can't handle a mortgage payment.
If your spouse has a lot of debt or issues with their credit, you could work with them to see how they could improve their situation. You might also be able to leave them off the mortgage entirely. This means you'll have to be financially capable of getting approved on your own. Your ability to exclude them from the title will depend on your state.
4. A Certified Home Inspector
This is a licensed professional who conducts a top-to-bottom review of the home. This typically includes checking the foundation and roof, along with the heating and air conditioning, plumbing and electrical systems. The buyer usually covers the cost, which can range anywhere from $280 to $400, according to HomeAdvisor.
While it may be tempting to skip the home inspection to save money or give you leverage in a bidding war, the last thing you want is to move into a new home only to discover costly problems.
Additional Team Members Who Could Prove Helpful
Other professionals may streamline the homebuying process, though bringing them on could increase your total spend.
- A housing counselor: Counselors who are approved by the U.S. Department of Housing and Urban Development can provide advice on everything from financing to federal programs you may be eligible for, usually at a reasonable fee.
- A real estate attorney: In some states, a real estate attorney is mandatory when closing a home sale. They can also be helpful if you have a complicated transaction, like buying a home in another state, or in a short sale or foreclosure auction. Rates commonly range from $100 to $500 per hour.
- A mortgage broker: A mortgage broker serves as an intermediary between buyers and potential lenders. Just bear in mind that they work on commission from lenders, so they may be motivated to push certain loans or providers. You may also be charged a fee.
- An accountant or financial advisor: An accountant can explain important tax implications of buying a home. A financial advisor can also help you evaluate your financial big picture to see how becoming a homeowner aligns with your long-term goals.
- Trusted friends or family members: If they have experience in real estate, all the better―especially if they can provide free insights. Just be aware that well-meaning folks could offer less-than-perfect advice. When in doubt, rely on the pros.
The Bottom Line
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