THE HOME BUYER PROCESS
You are ready to buy, so let’s talk about what to anticipate and how to be ready for the road ahead!
1. Make a decision to buy
2. Get organized
3. Shop for a home
4. Make an offer
5. Get a loan
6. Close on the home
7. Prepare to move
Decide to Buy
You are ready to purchase a home. Identify what you want and why. Below are a couple of questions to answer, before you begin.
1. What are your future plans?
a. Do you anticipate on having a family, growing as a family or maybe reducing the size of your family with kids moving out? These questions need to be answered, so you can identify the house of your desire and ensure it meets your needs.
2. Do you have enough cash for a down payment?
a. Identify how much you can afford for a down payment.
3. Can you afford your desired home?
a. This is a key question that only you can answer. Will your current spending habits allow you to live comfortably with a new mortgage, or will it cause you to struggle?
Now it’s time to gather key information and educate yourself for the process. First, check your credit rating to ensure that nothing is outstanding, which would prevent you from obtaining a mortgage. This can be done by contacting one of the three largest credit bureaus: Trans Union Corp., Equifax, and Experian (formerly TRW).
Next make sure that you have the loan capability for a mortgage. Contact a loan officer and get pre-approved. This will help you identify your available loan size and provide you with your affordable target range. For pre-approval, you will need to know:
· Cash available for a down payment
· Cash available for closing costs
· Current income
· Job status
· Estimated assets
· Estimated debts
Shop For a Home
Decide how you want to proceed with this process. When purchasing a home, you often will not have to pay for an agent. This is the seller’s responsibility. For your benefit, let an agent do the legwork for you. Do your homework when selecting an agent though, because you want to make sure you find the ideal home and not an overpriced lemon.
When evaluating a home that you like, have a list of questions ready to fire off. Your questions might include the name of the school district, what type of taxes are paid, why is the seller selling, what is the neighborhood like, and how are the neighbors. You might also want to know the condition of the house, the age of the mechanical systems (heat, plumbing, air conditioning), the amount of necessary house repairs or replacements, the builder, and date the house was built.
Next, research the neighborhood. Walk around and converse with the neighbors. Find out if the atmosphere fits your needs and family's desires.
When you find the home you desire, prepare an offer.
Preparing Your Offer
This is when you need an agent. You want to place a bid on the home, but do not want to pay too much. An experienced agent will be able to help gage a fair price and will negotiate with the seller and seller’s agent for you. Before you prepare to start bidding, identify the maximum amount you can afford. This will prevent you from getting overly excited or making too high of a bid, which will then fail to satisfy you later.
Prepare your offer and ensure that it’s within your price range. To add strength to your offer, because others are likely to be bidding also, include the letter of pre-approval from your lender. If you have contingencies or conditions, attach them to your offer. Be ready to include a deposit with your offer, which will be part of the down payment if the deal goes through.
The seller may accept, reject, or counter your offer within hours or days, depending on the quality of your offer and the seller's desire to sell. You can then accept the counteroffer or "counter the counter." Once the seller accepts, a third party (a lawyer, an escrow, or title company) completes the transaction with your lender.
Time to Get a Loan
If you’re not pre-approved, it’s time to get approved. You will have the choice to get a loan from the company who gave you the pre-approval or to shop elsewhere. This can be done through a lender or mortgage broker. A mortgage broker acts as a middleman between the borrower (buyer) and the lender. Do not take this process lightly! Examine the different types of available loans. Find the best rate, compare, and be well educated on your decision.
Close the Deal
Speak with an accountant if your closing date is near the end of the year. Your accountant will identify future savings with owning a home and will recommend a future closing date or earlier date for tax purposes.
Be sure that you estimate all your closing cost to avoid any surprise. Costs range between 2-7 percent of the purchase price of the home.
Prepare a walk through, to ensure the seller has completed any repairs specified in the purchase contract agreement and has completed any other contingencies found in the agreement.
It’s now time to close the deal. It is closing day and the seller officially signs the house over to you. Before signing any paperwork have your agent discuss each detail. From the day of signing the paperwork, it could take between 10 to 100 days to move into your new home, depending on the complications of the deal.