17 May The Home Buying Process
Whether you’re an experienced buyer or buying your first house, it’s important to realize that there are specific steps that should be followed when buying a house. You’ll feel more confident about your home buying journey when you understand what is required of you and every other person who is involved in the transaction. This article takes you through it, and shows you that you’ve got only 8 steps to buying a house.
1. Decide to purchase a home
There are many reasons you decide to purchase a home. Many people are tired of paying rent, some desperately want the title of “Home Owner”, and some are repeat buyers. No matter what your reason, be sure to base your decision on facts such as:
- If you are paying rent, you most likely can afford to purchase a home
- Know your exit strategy – do you plan on living in the home for a couple of years, 10 years, 30 plus years?There is never a wrong time when buying the right house as long as it aligns with your goals
- There are several down payment assistance programs so do not let lack of down payment deter you in your home buying process.
- Always be working on your credit. Good credit is preferred but “bad” credit won’t necessarily stop you in your home buying process.
- You most likely will not be able to purchase your “dream home” with your first home, but by making this purchase, you are one step closer to your dream home.
- There are many steps involved in the home buying process, but just take one step at a time and make sure you align yourself with an experienced agent, like myself (shameless plug).
2. Hire an experienced agent
The home buying process, and real estate transactions in general, can be quite complex. From contract to close at least 10 different individuals will share a role in helping you purchase your home – Buyer’s and Seller’s agents, closing attorney, pre-closer, loan officer, underwriter, inspector, appraiser, title search companies, contractors and a host of other individuals that all must seamlessly work together behind the scenes to get your home under contract and officially closed (sold). A good real estate agent will make this look effortless.
Be sure to hire an agent that:
- Has YOUR best interest at heart, and not theirs
- Understands your wants, needs and goals
- Is able to negotiate on your behalf
- Leads you to homes that fit your criteria
- Is good with paperwork and contracts – because there is a lot of paperwork and it must be accurate to protect you
- Will make the home buying process fun
- Be able to help answer and solve any problems that may arise (There is always something!!)
- YOU TRUST
3. Submit Loan Application to Loan Officer and get Pre-Approval Letter
- Even though you may think you can afford one amount, it’s always best to speak to a professional loan officer to make sure you are comfortable with your payments and not over-extending yourself
- In today’s market, in the home buying process, it is in a Buyer’s best interest to submit a pre-approval letter along with any offer. Many times there are multiple offers on properties and the seller will not entertain offers without this pre-approval letter.
- Most agents (including myself) will not show homes to a new Buyer without a pre-approval letter first (this is very important – I want to show you homes and am happy to do so, I just need to make sure we are viewing the right homes).
- I work with preferred lenders and have shared their information (lender link on home page). But at end of the day, you may choose whomever you want as a lender. It is my suggestion to use a local lender, and not an online lender as there have been issues with many online lenders and clients have lost out.
- From the first day you submit a loan application, you have 14 calendar days to shop lenders in which your credit will only take a hard pull once. You are shopping for the best loan and you will not be penalized for this as long as you stay within the 14 day period. So be sure to shop several lenders but be cognizant of your timeline. I recommend speaking to at least 3 lenders but no more than 5.
4. Find your Home
This is a lot of fun at first, but can be very grueling and become somewhat frustrating when you’ve been searching for weeks or even months without finding the home that matches your criteria. So it is critical to understand in the beginning of the home buying process what you are looking for– maybe even ask yourself the following questions:
- Where do I want to live that has homes in my price range?
- What are my must haves (needs) and what are my wants? What can I live without?
- Is location or size more important?
- Am I open to a townhome or condo (as opposed to a single family residence)
- Do I need to live in a certain school district?
- Is resale value important to me?
- Am I ready to make a quick offer when I find that perfect home? (In today’s market, many homes are gone just as fast as they are listed. Be prepared!!!)
Once you have your criteria, I will set up an easy FMLS search portal specific to your criteria. This will be an auto search that is sent to you daily (or weekly, whatever you prefer). Over 90% of home buyers start their search online. Let’s take advantage of this technology! Just try not to get addicted! Also, be sure to note if these homes are still “active” as this will determine whether or not the house is available.
Ninja Search Tip: Zillow is rarely accurate. You’re welcome
5. Submit an Offer
- In today’s market, be sure to know the comps and be prepared to make a competitive offer
- Price, terms and contingencies are the basic components of an offer
- Because it’s a seller’s market right now, there is a potential that the listing agent will receive multiple offers and will call for highest and best. Start thinking of what your maximum offer looks like. Keep in mind, the best price is not always the winning offer. Many times the seller is looking for a quick close or maybe even a longer time frame to close, or perhaps a temporary occupancy agreement? There are many things that help make your offer more appealing to the seller and this is another reason you want to hire an experienced real estate agent, and one that is aggressive with follow up, detail, persistence and contract creativity.
And if offer is accepted and bound then…….
6. Perform your Due Diligence
- Hire an Inspector: At this time, you will hire an inspector to inspect the home. Depending on the terms in your contract, you may have anywhere from 0-10 days to perform any kind of inspection you want on the home. This is a non-refundable cost to you. But this will protect you too. Wouldn’t you like to know if you need a new roof or new HVAC system prior to purchasing the home? If you decide you no longer want to purchase the home during this due-diligence time frame, you can walk away for any reason without losing your earnest money. We would also use this inspection report and time to ask for repairs or additional monies toward closing costs in lieu of repairs.
- Deliver earnest money to closing attorney or whomever is holding it within the time frame specified in the contract.
- Continue to submit required paperwork to lender
- Apply for the proper home owner’s insurance
- Within 3 days of closing, make sure you have called the utility departments to put all utilities in your name
- Prior to closing, conduct a final walk through
- Schedule movers – see Vendor link for recommended movers
7. Close on your new Home
This is by far the most exciting part of the home buying process! You’ve come a long way and finally made it to the closing table to sign all those documents. If you are here, you have been successfully cleared to close, the appraisal has been done and is good and all parties have agreed on all terms and amendments, if any. This is a time to celebrate and enjoy your new title of “Home Owner”! Congrats!!
8. Maintain and Protect your Home
Make sure you remember to take good care of your home and keep its value up. Replace air filters every 3 months, have the HVAC serviced regularly, hire an exterminator to protect your home from pests, seal any breezy windows, keep your yard manicured and go meet your neighbors! Enjoy your new home, but be sure to protect and maintain your investment! Also be sure to apply for homestead exemption if this is your primary home. This will save you money on your property taxes. Deadlines for filing Homestead Exemption vary by County. Be sure to check your deadline!