Aloha,
The Home-Buying Process
in 10 Simple Steps. Wouldn't it be great
if buying a home were as simple as it is in a game of Monopoly? All
you'd have to do is find a desirable neighborhood, hand the bank a few bucks,
and you receive a house. Of course, the home-buying process is a bit more
complicated in real life, and while it’s a process, it's not impossible. Competition
among buyers in today’s market has gotten intense, so if you're serious about
homeownership, you'd better get your act together. To point you in the right
direction, here is a road map of the home-buying process. From choosing
the right professionals to signing that final contract, here are the typical
steps you need to be aware of.
Step No. 1:
Chose an agent
The first step
in the home-buying process is to find an agent you feel comfortable working with on what will likely be the
largest financial decision of your life. Choose
a Realtor who communicates, has your best interest at heart, and puts you first.
Step No. 2: Find a
lender
Once you've chosen a
real estate agent you trust to be your advocate, ask him to recommend lenders. There are either direct bank lenders, or brokers, that will shop around for
the right loan for you to help you buy your home. A local Realtor® has experience
working with mortgage brokers and title companies and can recommend
lenders. Choosing someone to handle the financial part of the home-buying
process can feel like a scary step, but choosing a lender that's
competitive on rates, communicative, and available is key.
Often mortgage companies
consider you a file, not a human, and if they aren't available on the weekends or
evenings, you may not be happy working with them down the road.
Step No. 3: Clean up
your credit
Now that you have a
great lender, you can ask for guidance on any credit score issues you
may be facing. Whether it's a small or large problem, the lender can
provide guidance to help repair your situation and make sure you'll be approved
for a loan.
Step No. 4: Apply for
mortgage pre-approval
A lender will help you
determine exactly what you can afford and, therefore, which houses you should be considering. To arrive
at a purchase price, you'll factor in expenses like homeowners insurance,
association dues, and utilities to make sure you can comfortably make your
mortgage payments. The lender will then identify the total amount of money it's willing
to lend you.
Having a pre-approval
letter in hand when you're ready to purchase a home adds strength to your
offer, which can be an important advantage in this competitive home-buying
market.
Step No. 5: Create
a home wish list
Once you know what your
purchasing power is, talk with your real estate agent about your ideal
home. Come up with a few "musts," as well as "wants"
you'd ultimately be willing to compromise on. Think about the amount of bedrooms
and baths you must have, single level or stairs, yard work, or no yard work and
garage, or carport.
Think about
location. Do you want to be within
walking distance of restaurants? Do you want space between you and your
neighbors? Or is proximity to a good school the most important factor?
Step No. 6: Search the
listings
Now comes the fun
part: searching for homes that meet your parameters. When you begin touring homes that are
on your short list, take along a notepad and jot down your thoughts as you
approach each home. Can you imagine yourself living there? Open houses are great, but often times, many
homes will not be open, so ask to set up a time with your Realtor, to view
several homes in one day. But, keep it
to a maximum of 6-7, because they will all start to look the same, after a
while.
Step No. 7: Make an
offer
Your real estate
agent will walk you through the steps required to make an offer on a home
in your area.
Your offer will likely
include earnest money that will, be used to open an escrow account and
apply toward your down payment on the home. Expect some negotiation, and discuss a
competitive offer with your agent.
Step No. 8: Get final
mortgage approval
Once your offer to
purchase is accepted, you'll work with your lender to get final approval
for your home purchase by the date specified for the closing. The lender may
require you to pay property taxes or homeowners insurance for the first year at
the time of closing, so make sure you know what funds will
be expected. Your lender will give
you an estimated closing sheet that will give you an idea of how much you will
need to come to the closing table with.
Do not make any major
purchases like that big-screen TV or riding lawn mower until after closing,
especially if you'd be using credit, as that can affect your mortgage
qualification.
Step No. 9: Do your due
diligence
The due diligence process usually includes getting a home inspection to make sure
you haven't missed any hidden problems on your walk-throughs. If issues are
found, negotiate for the current owner to fix them or take the cost of repair
off the closing costs.
Step No. 10:
Attend the closing
Once all of the above
steps are completed, you'll be on your way to the closing table. This is
when the deed to the home is transferred from the seller to the buyer. Every
transaction varies, but plan to sign a ton of paperwork. An escrow officer will
guide you through the process. Then you'll officially be a homeowner and
receive the keys to your new home. Congratulations!
