Find a Realtor You Can Trust
This needs to be said. Not only do you need a person to trust, you need someone who will be there to answer all you questions and provide a strong support team to meet your needs. Do not be afraid to interview several real estate agents.
Analyze Your Needs in a Consultation
You have an idea of what you want to call home. The real estate agent you choose will be the person who helps you best meet what you “see”. It is important to discuss every idea you have. You will never find the perfect home. You do want to get as close to that as you can. If a property meets 80% of your needs it is worth considering. Often times we hear our clients using furniture as a factor. Remember, the furniture you have now, is for the house you have now.
Money Up Front
The vast majority of the money needed to purchase a home will be borrowed. You still have a number a things to do that will cost you upfront. Some come back to you at closing.
- Earnest Money is an amount of money put forward with the offer and is held when the offer becomes a contract. The most common amount is $500.00. Depending on what you are purchasing it can be as low as $50.00. This money may be returned at closing.
- Option Money is an amount that you give to the seller to purchase a period of time in which you can terminate the purchase contract. It is usually used in purchasing a resale home to enable the buyer to inspect the home in greater detail. The general amount is $25.00-$50.00 for a seven to ten day period. This money may be returned at closing.
- Inspection Fee is money you spend to have a licensed inspector inspect the home. You will receive a written report that you will use to ask the seller for repairs. This is not commonly done on new construction homes that have a one year builder warranty, but rather just before the warranty expires. The cost for an inspect generally starts around $175.00 and goes up with the size of the home and complexity of the inspection. This money is not recouped.
- Appraisal fees can be charged upfront by the mortgage lender. The appraisal establishes the value of the home and is completed by a licensed appraiser. Appraisels are generally around $450.00. This fee may be reimbursed at closing.
- Credit Report fees may also be charged up front. Credit reports are generally required for both spouses. Credit fees may also be reimbursed at closing.
Obtain Financial Pre-Qualification and Pre-Approval
This will be the hardest part of home buying. Talking to a mortgage lender forces you to tell it all. Let your mortgage lender know EVERYTHING. You do not want any surprises. Pre-Qualification will tell you, based on what is seen by the mortgage lender, what you should be able to qualify when the loan application is processed for approval.
There will be many homes, both resale and new construction that will be in your mortgage range. Focus on what you want for a mortgage payment. Your payment is not as negotiable as the sales price of a home. The first rule of buying a home is to make sure the home you buy is sellable. No matter how much you like the home, it has to have that same appeal to a large portion of the home buyers to follow you. Decide what is more important size or amenities. Decide on preferred locations. Schools may be a factor. Remember, a school district can rezone the neighborhoods that go to any particular school. Your home should meet your needs for the next ten years.
It is a good idea to look at no more than five or six at a time. More than that and you may have a hard time remembering what each house looked like. Take notes as you view each property. Have a list of the top five things a home needs to have and then a few “would be nice” items. Rate the home on a scale of 1 to 10. Write down its best feature and its worst feature. Remember walls can be painted! At the end of the day choose only two homes. Once you view all the homes and rated them, you should be able to have a list of no more than five homes for you final choice. Walk through the homes again and work your list down to the top two. At this point either home is the right home for you.
Write an offer to Purchase
Once you find the right house to call home you will write an offer with your real estate agent. There are many parts to the offer to decide. some of these are:
- The price you want to offer
- When you want to buy the home
- How will you pay for the home
- The amount of earnest money
- Do you want an option period
Negotiate and Counteroffer
The seller may accept your offer as presented, or counter your offer. This is the time when all the terms are worked out. This can take several days.
Accept the Contract
Once everyone has agreed, put everything in writing, signed all changes , the offer is dated and becomes the contract. The contract then goes to the title company for action. This is when many behind the scenes activities take place.
Inspections (Remove Contingencies)
At this point, you will have a licensed inspector to inspect the home and give you a report. There is a time limit to this based on the option period. Based on the home you may also need a septic inspection, sprinkler inspection, and pool inspection. You will complete an ammendment to the contract asking for repairs. Remember if the house is a resale home, you can not expect to make it brand new. You want to make sure everything functions as it should. Your real estate agent will advise you. The seller may or may not fix all that you ask. Again this is a negotiation period and if in the end you are not happy, you can terminate the contract under the option period umbrella.
Complete the Mortgage Application
Your mortgage lender will require a lot of documentation from you. There may be a time when you think the lender is being ridiculous. There are many regulations that the lenders must follow from both state, federal agencies. Be timely on getting documentation to your lender. Using a mortgage lender where you are purchasing a home enables face to face contact and insures you are not just a file number. Your lender will do a full credit report on anyone who is a purchaser and verify eligibility. In addition your home to be will be appraised to insure the home meets or beets the sales price.
At this point you are well on the way to buying your home. The underwriter reviews all the loan documents and insures that everything meets the lenders requirements. You may be presented with conditions. These items will have to be met before you will be able to close and the mortgage lender provides money to fund. At this point the items that are sought are generally to clarify an issue.
Obtain Loan Approval
Once the conditions have been met your loan will be approved and you will be ready to close.
Schedule Termite & Survey
Most loans will require these inspections. The costs are billed to the title company. These are completed at this point because of their costs. If they were completed prior to loan approval and the buyer was denied a mortgage loan, the buyer would be liabe for payment.
Contact Title Company
The title company has been working behind the scenes to make sure the home is ready to be transfere to the buyer. They have examined the title and aare prepared to issue a title policy. The title policy insures that should there be a reason for you to lose the property through no fault on your part you will be compensated. The exact terms will be explained during closing. Your closing appointment will be made.
Close on the Property
The day finally arrives for you to sign the documents that will give you posesion of the home. There are two parts to closing; signing and funding. After you sign the paperwork it goes back to the mortgage company. Once the mortgage company is satisfied that everything is in order they will release the funds and the house is now your home CONGRATULATIONS!
Take possession of your New Home
Now its time to get the utilities turned on, arrange for mail to be forwarded, and do all those homeowner things like cutting the grass.