Buying a home marks a significant chapter in your life, whether it’s your first or forever home. If you’re feeling overwhelmed about the process, don’t worry. Understanding the steps involved will prepare you to tackle this journey with confidence. To aid you on your journey, the Smart Move Real Estate experts present the ten essential steps to buying a home in Louisiana!
1. Determine Your Readiness
It’s tempting to dive head-first into housing. However, before searching, it helps to ask yourself if you’re ready to become a homeowner. Brandon Richoux, the CEO and broker of Smart Move, suggests that while mortgage rates can be unpredictable, assessing your readiness to make this investment can help you gain confidence in your decision.
Ask yourself these questions when assessing your readiness to buy a home:
How stable is my income?
Your lender will require proof of steady employment and income when applying for a mortgage. Salaried workers will be asked to present W-2s or pay stubs. Lenders will ask to see tax returns or other documentation if you’re self-employed or rely on social security.
Your debt-to-income ratio (DTI) also affects the loan size a lender is willing to grant. Your DTI compares your monthly debt payments to your income. We listed the debt-to-income formula below:
- Debt-to-income ratio = (total monthly debt / total monthly income) x 100
Have I checked my credit score?
It’s common for borrowers with credit scores at or above 740 to get better mortgage rates. However, the average credit score in Louisiana was 675 in 2023, which is lower than the ideal score. This means that borrowers in Louisiana with less-than-ideal credit scores have lower barriers to obtaining a mortgage. Additionally, borrowers who don’t have high credit scores can work with a realtor to find the right mortgage for their needs.
Do I have cash reserves?
Cash reserves are the savings set aside for mortgage payments in case of a financial emergency. Lenders usually offer better rates to borrowers with higher cash reserves. Your reserves are typically calculated based on the number of months of mortgage payments that can be covered by your savings, for example, six months of reserves.
Will I make the most of my investment?
When buying a home in Louisiana, you’ll need to make various payments apart from the mortgage. To make the most of your investment, you should plan to live in the house for a reasonable amount of time. This commitment allows you to build equity in the property while avoiding additional moving costs in the future.
2. Understand the Costs
Understanding the costs of buying a home helps to prepare you financially.
According to Redfin, as of February 2024, the median price of a Louisiana home is $246,300. This price consists of multiple payments made throughout the home-buying process. Applying these costs to the medium price tells us that the average homebuyer pays $16,785 – $67,472 to purchase a house.
| Expense | Approx. Amount |
| Earnest Money Deposit | $500 – $1,000 |
| Down Payment (3.5% – 20%) | $8,621 – $49,260 |
| Cash Reserves | $2,000 – $4,000 |
| Closing Costs (2% – 5%) | $4,926 – $12,315 |
| Home Inspection | $425 – $475 |
| Property Appraisal | $313 – $422 |
| TOTAL | $16,785 – $67,472 |
Explore in-depth explanations behind all the costs of buying a home in Louisiana!
3. Choose an Exceptional Realtor
A real estate agent’s job isn’t just to find you a home. A great realtor acts as a guide that manages your wants and needs while still keeping you in the driver’s seat. Below are some of the benefits of a quality realtor:
- Expanded Expertise: Throughout the homebuying process, you’ll encounter various forms, policies, documents, and disclosures. An agent will guide you through these steps, helping you make the best decisions.
- Reliable Support: An excellent realtor continues beyond finding you a home. They are there to ease your concerns and adjust the process to your needs, prioritizing you, not the transaction.
- Enhanced House Hunting: Most real estate agents employ robust listing services that increase search range. These professionals monitor the market continuously to scout the perfect house for your needs.
Learn more qualities you should look for when searching for a real estate agent.
4. Get Preapproved for a Mortgage
“Mortgage preapprovals help to get your foot in the door when making an offer,” says Smart Move agent Racheal Taylor. “A prospective buyer with proof of income takes priority over offers lacking documentation.”
Mortgage prequalifications and preapprovals demonstrate to sellers that you are a qualified buyer. Both involve presenting financial information to a lender to get an estimate of the mortgage you’re qualified for. Though mortgage prequalifications and preapprovals seem similar, they have distinct differences.
Prequalifications
Prequalifications often act as the first step before a preapproval. It consists of a self-reported process where you share estimates regarding your income. Below are a few things your lender will ask you about:
- Annual income
- Employment history
- Value tied to assets
- Credit History
Preapprovals
Preapprovals consist of a more in-depth process compared to prequalifications. Here, you present financial records to your lender to receive a more accurate estimate of your borrowing potential. Below are examples of the documentation you may need:
- Bank statements
- Pay stubs
- W-2 tax returns
- Schedule K-1 (Form 1065) for self-employed borrowers
- Income tax returns
- Asset account statements
- Retirement savings, stocks, bonds, mutual funds, etc.
- Driver’s license or U.S. passport
- Divorce papers
- Gift letter
View our complete mortgage preapproval guide!
6. Find the Right Home
It’s house-hunting time! Your realtor will help you find the right home based on your needs. However, there are many tools you can use to begin searching on your own. Smart Move offers tools you can use to kickstart your search.
Submission Forms:
Get started buying a home in Louisiana by filling out a simple submission form. Smart Move submission forms let you send your preferences directly to an expert realtor. The form comprises three segments: property basics, features, and an about you section. The process takes approximately 3-5 minutes to complete. Click here to explore our submission forms!
Property Map:
The Smart Move property map gives you the jump on house-hunting, letting you start searching independently. The property map enables you to tailor your search to anything from a preferred number of rooms to school districts. Start searching now!
7. Make an Offer
“There are a lot of factors that go into making an offer on a house,” says Chris Thomas, Smart Move realtor with over two decades of experience. “We consider everything from market analysis and forecasts to seller personalities and sentiments.”
Now that you’ve found your dream house, it’s time to make an offer. Here, your realtor will draft and submit an offer letter. Some factors to discuss with your realtor include:
- Demand: How is the neighborhood? Has the home been on the market for a month? Factors like these affect the demand for the home, in turn affecting your offer.
- Comparable Homes (Comps): Look for similar houses online and note the differences in price and features.
- Repairs and Renovations: Are there any repairs that need to be made? Consider asking the seller to make the repairs as a concession.
8. Have the Home Inspected and Appraised
“We highly recommend our clients to have their prospective homes inspected,” states Smart Move agent Chelsea Snyder. “Inspections can unveil negotiating opportunities that can save thousands. More importantly, it gives you peace of mind that you’re buying a safe home.”
Before purchasing a home, we highly recommend having it inspected. During the process, an inspector assesses the property for any damages or health hazards that may affect your purchase. Talk to your realtor about including contingencies that hold the seller liable for costly repairs.
A home appraisal gives you the value of the house. These are typically required by lenders when paying with a mortgage. A lender will only let you borrow what a home is worth. In this event, you can apply for a different mortgage or renegotiate your offer.
9. Invest in Homeowners Insurance
If you’re buying a home in Louisiana, we highly recommend investing in homeowner’s insurance. Homeowners insurance covers the cost of property damages or losses like natural disasters or burglaries. Most lenders require you to have homeowners insurance when applying for a mortgage. You’ll make these payments to your lender, who transfers the funds to the insurance provider.
10. Prepare for Title Work and Closing
After applying for a mortgage, you’ll receive a loan estimate and a closing disclosure. Review the information with your realtor to ensure your conditions are acceptable. After approving the loan disclosure, it’s time to prepare for your title meeting. Below is a list of items to bring to your title meeting:
- A form of ID.
- A copy of your loan disclosure.
- Proof of closing cost funds.
From there, you’ll sign a settlement listing all of the costs included in the transaction. During the process, you will pay your down payment and closing costs. The following document you will sign is a mortgage that states you will repay your mortgage. Lastly, is the mortgage or the deed of trust securing the mortgage note.
Congratulations, you are officially a homeowner!
Buy a Home in Louisiana with Confidence
Understanding the homebuyer process is crucial to buying a home in Louisiana. However, you shouldn’t have to do it alone. Smart Move agents work with you every step of the way, ensuring you understand each part of the process. To speak with an agent today, send us a message or call us at 225-448-2850. We look forward to hearing from you!