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. Whatever your questions, REALTORS® are here to help you through the buying process.
Pre-Approval
Unless you are paying cash for a home purchase, you will need to talk to a lender to figure out what you can afford and to become pre-approved. Make sure to get pre-approved 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, financial planning for homeownership calculates all the expenses that go into owning a home, not just the mortgage payment.
Know What You Are Looking For
Once you have been pre-approved, the fun begins! Knowing your budget will help narrow down the type of home you can purchase. This is a good time to make a list of needs versus wants. Consider things like the number of bedrooms, proximity to work or schools of choice, tax rates, zoning, crime rate and potential communities. Once you have a list of things that are important to you, then you are ready to start the search.
Buyer’s Agent
Buyer’s agents are real estate agents that working exclusively for YOU, the buyer! Buyer’s agents keep all of your information private, can show you agent listings from the MLS (Multiple Listing Service) and FSBO (for sale by owner) homes. Real estate agents have the resources to help you make the right choice and pay the right price. Buyer’s agents will walk you through every step of the process and paperwork.
The Search
Your REALTOR® will use the information that you give them to find possible homes for you, 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 about 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; 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. 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. Often, the first offer is not accepted, and the seller will provide a counteroffer. A REALTOR® can help with the contract and the negotiations. Once an offer is agreed upon by both parties, the final contract will be signed. 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 applied towards closing costs later.
Inspections
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 discover. Home inspectors will check everything from the foundation, construction, plumbing, electric, heating and air systems, to the interior windows, doors, appliances, leaks and more. If requested, home inspectors will also conduct a radon inspection. After an inspection, the buyer may request that the seller make repairs prior to closing. A pest inspection may also be ordered to determine if there is a presence of wood-destroying insects such as termites or wood bees.
Insurance
During the home buying process, you will also need to find a provider for your homeowner’s insurance policy. Shopping for coverage may help you find more cost-effective insurance solutions.
Closing
Most contracts specify a set number of days until the closing. Forty-five to sixty days may seem like a long time, but it is a very busy time! Just before closing you should contact all of the local utility companies to verify services. Your REALTOR® can help coordinate for the seller to cancel their services the day of closing and your services to begin. 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 to ensure a smooth transaction. If you have a specific attorney you want to use, let your lender know. A title check will also be completed by a real estate attorney or title company, and down-payment and closing-cost payment arrangements will be made.
Just prior to the closing, your REALTOR® will 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.
On the big day you will gather with your REALTOR® 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. In your cramped hand, you will leave holding a mortgage, title and keys to your new home. With a sigh of relief and a smile on your face, you will officially be a homeowner.