Homeownership – 12 min read
How buying a home with Dwelling works
Learn more about how to use Dwelling to buy your first home.
Homeownership – 12 min read
The world of real estate is notoriously difficult to understand.
From financing to legal paperwork, from making an offer to closing a deal, you'd be forgiven for thinking that buying a home has been made intentionally complicated and confusing.
You would not be wrong. Keeping people confused helps keep profit margins high, and the real estate industry thrives on making clients dependent on them to help them navigate buying or selling their homes.
This is especially true for people trying to buy a home for the first time with little experience in the real estate world.
At Dwelling, our mission is to make it easy for aspiring homeowners to buy their first home. Part of that mission is helping our clients understand the landscape before setting off on their home-buying journey.
This guide was created to help you learn about how the home-buying process works, how Dwelling is different, and how you can utilize Dwelling to buy your first home for much less out of pocket than with a traditional agent.
After reading this article, you'll know:
- How buying a first home normally works
- How Dwelling's process is different
- Who can buy a home with Dwelling
- How to buy your first home with Dwelling
How buying a first home normally works
Most first time home buying transactions in America follow a very similar process.
1. Learning how the process works
Most first time home buyers stumble through in the beginning. Some go view a few homes before realizing they need mortgage financing first, and others get snubbed by a few agents for not having a down payment saved. Once aspiring homeowners are learning how the process works, the steps ahead of them begin to become clear.
2. Saving for upfront costs
It's no secret that buying a home is one of the biggest commitments most people make in their lifetime. Before moving forward, aspiring homeowners need to learn how much cash they'll need upfront, and how much of a mortgage they can afford.
Many Americans don't make it past this stage. Far too often, they end up disqualifying themselves on the false assumption that they don't have enough saved to buy a home (more on that later).
3. Finding a Real Estate Agent
While it's possible to buy (or sell) a home yourself, it's not the right move unless you're intimately familiar with the home-buying process and an expert negotiator. In short – you'll probably want an agent on your side.
Most people end up with their agent through a referral or by chance. The problem with this approach is that you might very well end up making the most important financial decision of your life while knowing next to nothing about the person who's acting as your advocate through the entire process.
Knowing whether agents focus on selling or buying (many focus on selling due to higher margins), how much transaction volume they do a year (the majority do under 10), and how often they work with first time home buyers (as their needs are very different) are all crucial questions you should be asking before making your choice.
4. Creating a budget
A good agent should help you create a home buying budget based on your unique financial situation. This budget should include an estimate of your target purchase price, required upfront costs, and estimated monthly mortgage payment. Bonus points if your budget includes other home expenses like property tax, utilities, and a home maintenance fund.
5. Getting pre-approved for mortgage financing
Unless you have a big pile of spare cash on hand, you'll probably need a mortgage to buy your home. Mortgages allow a bank to buy your home on your behalf, and you then pay off that debt every month. Paying off your mortgage helps you slowly build up your home equity (or ownership stake).
Pre-approval means that a bank has judged you worthy of credit, and they're ready and able to buy a home on your behalf. You'll need to be "pre-approved" for a mortgage to be competitive when you decide to put in an offer on a home – without it, you won't be able to move fast enough to put a serious bid in if you find a house you love.
Don't forget that your credit score and income are the primary yardsticks banks use to determine your interest rate and how much they'll lend you. Doing what you can to improve both before seeking pre-approval is always a good idea.
6. Identifying homes that fit your budget
Now the fun part begins. Using your budget from Step 2, start looking for homes in your area that fit your preferences. You may have to play around with them a little if your budget isn't surfacing many homes that match your preferences.
The typical place to search for homes is on Zillow, but searching for homes using Dwelling allows you to see the total upfront and monthly costs after taking into account the money Dwelling finds for you.
7. Start viewing homes
Now, the fun part. With your agent's help, you'll start viewing homes that fit your budget and preferences. Take your time and enjoy yourself. Attending several viewings will help you prioritize what you want in a home while preparing you to move quickly when you find the right one.
8. Start making offers on homes
When you find a home that works, it's time to move quickly. Your agent will help you decide on an offer price and present it to the seller. If you're disciplined, you might need to go through this process a couple times before you win in competitive markets.
9. Get an offer accepted
If you followed these steps well, chances are you'll soon have an offer accepted by the home seller. You're nearly a homeowner, but there's still work to be done.
10. Close the deal
Now comes the time for crossing your T's and dotting your I's. Assuming your financing was figured out before you put in your offer, you'll need to work with your agent to make sure you have whatever cash you'll need on hand to make the transaction. Before paying up, however, you should get the home inspected. This should unearth any potential issues the house faces, and gives you grounds for final negotiations (or to pull out of the deal) with the home seller if the inspector finds anything concerning.
If the deal falls through, you'll have to go back to viewing homes again. If things seem good, your agent will then help you work with lawyers to manage the change in title from the seller to your name while facilitating the financial transaction.
After the closing period is over, you officially become the owner of the home. It's time to move in and start the next chapter of your life.
How Dwelling's process is different
Whew. As you can see, buying a home can be an exhausting process – especially when you factor in the fact that you might be stuck in step #1 for years and years, waiting until you've built up enough savings to cover upfront costs like your down payment and closing costs.
Dwelling's goal is to eliminate the two most obvious pain points in the traditional home-buying process – having to save money for years and coordinating multiple vendors to buy your home.
Eliminating the need to save for upfront costs
America has over 2,500 federal, state, and non-profit funding programs that help cover first time home buyers' down payment and closing costs. While their existence is a wonderful thing, several barriers make it difficult for aspiring homeowners to access them.
First, it's nearly impossible for aspiring homeowners to identify which programs you're eligible for without manually searching them out and sifting through dozens of eligibility documents.
Program eligibility and opportunity is always changing as well, making prioritizing the best programs for your situation nearly impossible for home buyers and industry professionals alike.
Down payment assistance programs are all run by different organizations, too. You may have to call a specific county office for one, and locate the necessary paperwork to fill in and mail for another.
Finally, most industry professionals (agents, mortgage brokers, and everyone in between) are usually unaware or lack the incentives to bring up these programs to their buyers. Traditional agents and lenders make less commission on buyers using down payment assistance programs, leaving first time home buyers to try to figure them out on their own. All too often, the difficulty & complexity in accessing these programs leave many aspiring home owners too discouraged to use them.
At Dwelling, we believe technology can help aspiring homeowners achieve their goals and the incumbents lack the motivation to make the necessary changes themselves.
To start, we've created a seamless process to help aspiring homeowners get matched with the best funding program for their situation quickly at no cost to them.
Most of our customers receive more than enough no-strings-attached funding to cover their entire downpayment and closing costs, meaning they can purchase their first home without saving for years in advance.
Combined agent & mortgage services
We hear it from our customers all the time – lining up all the vendors and services you need to buy a home is one of the most difficult and stressful parts of the process.
Locating, vetting, and selecting the right real estate agent and mortgage broker can take weeks, and it's difficult to know if you've made the right choice. Not only that but most only have a cursory knowledge of home purchase assistance programs, leading many to disregard them as potential complicating factors.
At Dwelling, we've made this process simple. Our in-house Mortgage Financing and Real Estate Experts know everything there is to know about down payment assistance programs, and they all live under Dwelling's roof. All an aspiring homeowner has to do is start the process and we'll handle it all for you, from financing to closing the deal.
Purpose-built Real Estate technology
While more and more technologies are hitting the market aimed at helping already wealthy people invest in their second or third properties, very few real estate or technology teams are building tools to help aspiring renters become successful homeowners.
At Dwelling, we are rebuilding home buying from the ground up in support of aspiring homeowners. That's why we created the only home search tool in the market that includes the money our Down Payment Assistance Matcher finds for you while allowing you to search for homes based on your unique financial situation.
In addition, we recently launched a credit builder tool that helps you track your actual mortgage related credit score using the same FICO scoring mortgage providers use, rather than the Vantage score tools like CreditKarma use.
Who can buy a home with Dwelling?
If you have a credit score above 620 and can get pre-approved for a mortgage, you should be eligible to buy a home using Dwelling. If your credit isn't there just yet, we can work together to get your score up with our home buyer focused credit builder tool.
People without enough savings for a traditional down payment
Don't have enough cash saved up for a down payment? No problem. Dwelling will help you get money to cover your downpayment and closing costs
People with a down payment saved
You've worked hard to save enough for a down payment, but that doesn't mean you're not eligible for down payment assistance. Dwelling can still help get you money to cover your down payment and closing costs so you can invest your savings for retirement (or the renovation of your dreams!).
People who don't know where to start
Don't let confusion stop you from pursuing the dream of home ownership. Our Real Estate Experts are happy to help guide you through the process, with no pressure tactics in sight. We'll make buying your first home ridiculously easy.
How to buy your first home with Dwelling
Now with all that out of the way, let's get into the real reason you're here – buying a home with Dwelling. Here's how it works.
Lock in your financing:
There are two core parts to ensuring you're financially ready to buy a home with Dwelling: identifying the Down Payment Assistance programs you're eligible for, and getting pre-approved for a mortgage.
Finding the right Home Purchase Assistance programs for you is simple. Create and complete your account on Dwelling.co and we'll we'll find and calculate how much down payment assistance you can get based on your income and preferred home buying location.
Once we uncover how much of your down payment and closing costs are covered, we'll help you get pre-approved for a mortgage. While you can use any mortgage lender you'd like, working with Dwelling Mortgage allows those who qualify to get pre-approved with assistance online in just a couple minutes.
If your credit score is below 620, we can help you improve it with our Credit Builder. You'll need credit above 620 to qualify for Down Payment Assistance, and above 580 to qualify for a mortgage.
Submitting your pre-approval application (for any mortgage provider) will trigger a credit check. However, mortgage credit checks only have a minimal and temporary impact on your score (usually 5 points or less). You can also submit multiple pre-approval requests without increased impact for up to 45 days.
After submitting your application, you'll get your pre-approval within a day or two showing you exactly how much you can afford and what type of assistance you can get from Dwelling.
If your financing looks good, you're ready to go house hunting! Our in-house agents will be in touch to help you, but don't delay. The home buying process can take several months, so the sooner you start, the better.
Find the perfect home:
Now that your down payment, closing costs, and mortgage are covered, it's time to find homes that fit your budget and preferences.
Browsing local homes listings on Dwelling takes your Home Purchase Assistance into account in home pricing displays.
Log into your Dwelling account and click "Listings". Here, you can set home price filters alongside bedroom, bathroom, and other home feature filters.
Start saving listings by clicking the ❤️ emoji in the top right of each property.
When you're ready to start viewing homes, our Real Estate Team will be in touch to help you book property viewings of properties you'd like to see.
Become a homeowner:
After viewing a few homes, you'll be ready to start putting offers in. Our Real Estate Experts will work with you to ensure that you're making the right decision and submitting an appropriate offer.
Once your offer is accepted, they'll walk you through the rest of the closing process from inspection to move-in.
Congratulations – you're now officially a homeowner! 🎉
Published on October 11th 2023.
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