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Stages of the Home-buying Process

There are 6 main stages of the home-buying process. In each stage, there are several several steps that can generally happen in any order within that stage.

STAGE 1 – Preparation

Learn as much as you can: You want to start by learning as much as you can about the home-buying process – This site should be a big help plus I have some additional links below.

Determine both what you think you can afford and what the banks think you can afford: In this step you should be looking at your expenses and your anticipated income during residency to see what sort of monthly payment you think you can afford. Then you can get on a mortgage calculator website to see what that translates into as far as a home price goes.

This though, is only part of the process. The bank is going to make its own determination of what it thinks you can afford. This is where going with a physician loan can be helpful in that they can take your contract for your residency as proof of income and they won’t hold your student loans against you as a liability.

Make a mortgage information folder: I talk about this more here, but it is helpful to have all of the documents that your lender will want in one place. This will be a couple years worth of tax returns, recent W2s or 1099s, recent paychecks, a copy of your residency contract, and the balance and payment info for any debt that you have.

Find a reliable and capable agent: As I discuss here, there are an abundance of reasons you should get an agent in your particular situation. It can be difficult to find a trustworthy agent in a town where you don’t know anyone. That is actually how I support this website, by helping you find an a good agent where you are moving. It doesn’t cost you anything, the agent pays a referral fee to me.


STAGE 2 – Search

Educate your real estate agent regarding what you want: The last thing you want is to have your agent show you a bunch of houses that you’re not interested in. But real estate agents aren’t mind readers, help them out. Find pictures, find houses on the internet, tell your agent what you like and what you don’t like about the houses. You may not even know what you like or don’t like yet. That’s fine. But the more that you can talk to your agent about this the better the search process will be for you both.

Make use of real estate websites and Google maps satellite view in order to save time when seeing houses: Using sites like Zillow and Realtor.com may be obvious or maybe not. Use them, they will be huge help for you. What may not be so obvious though is using Google maps satellite view (or Google Earth). The Zillow page may neglect to show you that the backyard of this otherwise perfect house backs up to the Wal-mart – maybe that’s a good thing for you, or maybe not. Either way, nice to know.

Remember to buy with the end in mind: I have devoted a whole page to this because it is super important to your situation. You will most likely be living in this house only 3-5 years. You want something that you can re-sell quickly and easily. Every household is different, so this will mean something different to each. But you should talk with your agent about what sorts of homes sell quickly and why.


STAGE 3 – Offer

This stage is pretty straight up and it is one of the main reasons to have a real estate agent. If you have a good agent (and I will make sure that you do), they will walk you through this stage. There is one important thing to remember at this point though, it is the words to a 19th century cowboy song: there’s more pretty girls than one. You will be leaving this house in 3-5 years anyway, don’t let your fondness for this one lead you to making an offer or counter-offer that will make it harder to financially extricate yourself when you are ready to move on.


STAGE 4 – Escrow

The time between when your offer is finally accepted and when you close on the home is generally called “escrow” or “the escrow period.”

The Option period: If you negotiated an option period in your contract then that will be the first phase of your escrow period. During this time you will want to have the home professionally inspected. Also, if there were things you were hoping to do with the property – like put in a pool (don’t put in a pool at this stage of your career) – then this is the time that you need to verify that you can actually do what you have hoped to do.

Getting the loan: Now that you have an actual property to be considered, lenders can give you a loan estimate. Here I talk about how to understand and compare these estimates to choose the best one for you. After you have chosen the best one, then you need to go ahead and apply for the loan. Hopefully, you have already gathered all your documents as I suggested here and this step should be pretty quick and straightforward.

The waiting game: now you just wait. Your agent should be working with your lender to make sure that everything is proceeding properly. You will be given a closing date and then you can just wait anxiously for that day to come.


STAGE 5 – Closing

This is the simplest and most momentous stage of the whole process. You will show up to the title company, sign your name about fifty-eleven times, and walk away with a new debt to rival what you paid for 4 years in med-school. Yay you, welcome to being a home owner.


STAGE 6 – Celebration

Go to your new home, crack open the beverage of your choice, and give thanks.