Steps to Buying a Home

Before considering a home purchase, it is essential to know how much you can afford. With certain income, debt, down payment and credit information, a mortgate lender can determine price range. But, you also must determine your payment comfort level based upon your available funds for the purchase, your monthly expenses including taxes and insurance and other obligations you have. It is important to note here that where high down payments are helpful, waiting to have one is not always necessary or advisable. Credit scores determine rate. If yours allows for the type of home purchase you want, it is time to look for a lender.

Different banks and mortgage companies have an abundance of loan products to meet your needs. The amount of fees charged to originate a loan and/or the discount points charged to determine rate will vary from lender to lender. When comparing multiple quotes, make sure you are comparing apples to apples. A lender’s website and referrals from various sources provide invaluable insight to make the right choice in a lender. HINT: the process of a loan is not just about rate. The more the right lender knows, the more likely you are to close at the right rate and on time. Always ask for a pre-approval letter to include with an offer you make.

Before you begin your home search, it is important to choose the right representation to guide you through the process. The REALTOR® you choose should be an authority on both local market conditions and pricing as well as a seasoned negotiator. The best REALTORS® will ask plenty of questions before your search begins. How you answer will determine if your wants and needs are reflected within your budget or if adjusments to the search are necessary. The REALTOR® you choose should also have an in depth knowledge of insurance, finance requirements and how appraisers determine value. This kind of assistance will lead to a considerably more efficitent and desirable outcome. Finally, read testimonials. Do not base deccisions solely on how professional or easy to work with the REALTOR® was. Not all transactions are easy. Look for the common denominators in the reviews and choose based on what matters to you in representation.

Start your home search by using your agent’s website (like this one!) to search the MLS for homes. Agents have a direct line to the MLS, so their websites often update with the newest properties faster than the ‘big name’ sites out there. It also has a My Listing Manager tool that keeps you both in the loop. You can start your search and begin saving your favorite properties to your account and even set up alerts to get new homes and price changes emailed to you. Your agent can then see the properties you have liked and can send potential new properties directly into your listing manager that they think you may be interested in. It’s a WIN-WIN!

There is an art to making an offer on a home. You will find out quickly why you hired someone who is an authority on the local market. He or she understands that listings are often marketed with different seller approach or intent. Some are firm on price whether or not it is accurate. Some price to negotiate either the price or seller concessions. Some even bring their home to market at less than its value to entice multiple offers to drive up price. Even though you will seldom know a seller’s motivation, your experienced representation will advise the best way to approach an offer based on the price as it pertains to market value. Negotiation is not all about price. Giving in one area may help you gain in another e.g. be flexible on closing date in exchange for sellers perhaps helping cover some of your closing costs or rate reduction. Most contracts are AS-IS but your REALTOR® will protect your earnest money deposit with inspection contingencies and keep you within the guidelines of any contract.

Once your offer has been accepted, you will need a home appraisal. Banks require this so they can make sure the home is worth as much money as they are lending you. You may also need some inspections depending on your loan type. FHA and VA loans have more requirements than conventional loans. This is also the time to have a full home inspection, even if it is not required. A home inspector will go through the home and specifically look for problems and provide you with a full report on everything they find. This will give you the opportunity to avoid major problems and back out of the sale or negotiate repairs without losing your earnest money.

Even with the heavily used AS-IS contracts, it is common for buyers to request certain repairs be made from a licensed home inspector’s findings. Some of these repairs may impact your final loan commitment or insurability. It is important to be reasonable in these requests. Usually if an item is expensive enough to impact the agreed upon sale price, or compromises insurability or safety, most sellers will acquiesce to the request. In the interest of time or available funds the seller may also discount the purchase price in lieu of making the repairs.

The final walk-through is an important last step, even if you are positive you are going to go through with the sale. Walk through and check the agreed upon repairs, make sure everything is in working order and new issues have not popped up. This is your last opportunity to back out. If everything looks good, then it’s time to go to closing!

Before the home is legally transferred to you, the closing process must occur. During this phase, you will sign all of the mortgage documents, pay closing costs, and sign various other legal documents. Your buyer’s agent will be at the closing with you to help you through it all. Once all of the papers are signed and monies are transferred, the keys to your new home are yours! The only thing left to do is move into your humble abode. This may occur immediately after the closing or at the date set in the closing documents.

Depending on how far you’re moving or how much stuff you have, you may require a moving company or a moving truck. Professional movers may seem pricey at first, but when you look at the time and money to get similar results, you may re-consider. Call and set your moving date and start packing! Many places like U-HAUL sell moving boxes that are made to make your move easier. Label everything with what is inside it and what room it goes in. Recruit friends and family if needed.