Home Buying Process
So you have decided that it is time to buy a new home! Whether it is your first home, upgrading, or downsizing, you are sure to have questions. For those just starting out, the questions probably start with ‘Where do I begin’. For those that have already purchased before, the questions may be slightly different. Whatever you questions are, we are here to help you through the process of owning a new home!
Steps to Buying a Home
Very few people have the luxury of paying cash for a home purchase, this means that you will need to talk to a lender to figure out what you can afford and to become pre-approved. Make sure to get a pre-approval and not just pre-qualified. Being pre-qualified means that you’ve told a lender your income and debt so they could estimate what you can afford. A pre-approval letter on the other hand can seal the deal when negotiating with a seller. That letter means that the major legwork for financing has already occurred. Remember, good planning for homeownership includes all the expenses that go into owning a home, not just the mortgage payment.
Know What You Are Looking For
Now that you have been pre-approved, the fun begins! Knowing your budget will help to narrow down the type of home you are looking for. This is a good time to make a list of needs vs. wants. Consider things like the number of bedrooms, proximity to work or schools of choice, tax rates, zoning, crime rate, and the community you would like to live in. Once you have your list of needs and wants, as well as things that are important to you, then then you are ready to start the search.
Buyer’s agents are real estate agents that have all of the knowledge and information as an agent working for the sell, BUT they are working exclusively for YOU! Buyers agents keep all of your information private, can show you listings from the MLS (Multiple Listing Service) from other agents, and FSBO (for sale by owner) homes. Real estate agents know each area of town, they have the resources at hand to get the most out of your search, including making sure you pay the right price for your house. Buyer’s agents will walk you through every step of the process and paperwork.
This is another benefit of using an agent during your home search. You can spend countless hours searching through listings online to try to select a few you want to see OR, you could let an agent do that for you. Your agent will take all of the information that you give them (Remember your "needs, wants, and important things" list you made earlier?) and use that to find possible homes for you to check out. You agent will also be able to give you average home prices for each neighborhood and past purchase prices for each home. Together you will narrow down your search options and your agent will set up the appointments for showings and provide feedback to the seller. You get to simply show up and decide! While looking at homes, take plenty of notes on the listing sheet. Write down what you like and don’t like with each home. These important details may be hard to recall after 5 or 10 houses but could prove to be essential in your ultimate decision. The search can often be the most exciting part of the process, so enjoy it!
Making an Offer
You’ve searched and searched and have decided that this house is the one. Congratulations! The next step is writing an offer. Again, you are probably very happy that you chose an agent for this important step! The offer reads like a contract. The offer includes details of the price you are offering to pay, any home inspection contingencies, items you would like included in the purchase (stove, washer, dryer, etc.), any title contingencies, and a basic timeline for the seller to respond to the offer. Many times offers are not accepted and the seller will provide a counter offer. Once the negotiations conclude and an offer is agreed upon by both parties, the contract will be signed one last time. Most offers include an earnest deposit. This lets the sellers know that you are serious about purchasing their home. The check will be deposited and is usually used for closing costs later on.
A thorough home inspection is crucial when buying a home. Purchase offers should always be contingent on a home inspection. What looks great to the naked eye may have serious issues that only a professional home inspector will find. They will check everything from the foundation, construction, plumbing, electric, heating & air systems, to the interior of windows, doors, appliances, leaks, and levelness of each room. Home inspectors will also conduct a Radon inspection, if you desire. Often times after an inspection, the buyer will request repairs to be made by the seller prior to closing. A home inspection is well worth the money for your future investment. Kentucky is also notorious for wood destroying insects such as termites or wood bees. This inspection should be done at this time, and if anything is found, the seller should repair according to the contract.
It is now time to find a provider for your homeowner's insurance policy. It is best to try and put all of your insurance with one carrier, plus to try to take the highest deductible you can safely afford. You should also shop your coverage as you may be surprised to find the cost differences among providers
What you've been waiting for - closing time! Closings are timely events, with most contracts specifying a set number of days until the closing. Forty five to sixty days may seem like a long time, but it is a very full and busy time! A lot happens in those few days. The inspection is made and repairs requested. Just before closing you should contact all of the local utility companies to make sure that the services will not be interrupted. The seller should cancel their services the day of closing and your services should begin. Use your Realtor® to help coordinate this with the seller. As a buyer, you will be busy finalizing lending paperwork. Your agent will make sure this process goes as smoothly as possible. Your Realtor® and lender will usually choose an attorney they have developed a relationship with to make the transaction smooth. If you have a specific person you would like to use let your lender know- they work closely with them throughout this process. A title check will be completed by a real estate attorney or Title Company, homeowners insurance will be lined up, and down payment and closing cost payment arrangements will be made.
On the big day you will gather with your new closest friends (admit it, you have spent and probably enjoyed a lot of time with each other at this point), to sign the biggest stack of papers you have ever seen. True story, it’s huge! The closing should take roughly an hour and will involve a lot of writing, so get that signing hand ready! You will be asked to verify and provide certain information to the lender to complete the transaction. Just prior to the closing, your Realtor® should schedule a final walk-through so you can ensure all terms of the contract have been met before closing. The title company/real estate attorney should also provide you with the completed, accurate settlement statement that enumerates exactly what costs are involved in the transaction. Make sure this is carefully reviewed before closing You will leave holding in your cramped hand, a mortgage, title, and keys to your new home. With a sigh of relief and a smile on your face, you are now officially a homeowner.