Steps to Buy a Home
It is time to buy a home. What do you do now?
Get pre-approved for a mortgage
Once you have your credit scores in the best shape possible, and with your down payment securely settled in your savings account, gather your earnings statements and get pre-approved for a mortgage. Not only will this give you a reality check on exactly how much house you can afford, but the pre-approval also gives you a strong platform for negotiating the best price. Sellers want to know you are serious. The pre-approval proves that you are. Now you can begin your home search in earnest! Step one to buy a home –check!
Conducting The Search
Using your home-search priorities as a guide, start looking for houses you can afford in the neighborhoods that best suit your needs.
MLS (Multiple Listing Service) – Be sure to view the details on all listings that meet your search criteria, look at the map, and keep a log of the houses you are interested in. This will help you stay organized and remember what you’ve seen. On my website you can rate houses and take notes on the website.Once you’ve found a house that looks promising, you will want to view it in the real world. Drive around the neighborhood. Where are the parks, schools, and shopping. Take notes.
Once you are really interested in a home I will research the price parameters of recently sold, similar houses. This will ensure that you are making an offer consistent with recently completed sales – and it increases the chance that your offer will be confirmed by the appraiser your lender will assign to confirm the validity of the deal.
Choose a Home
There’s no doubt that choosing a home is a big decision and you want to do it right.
As a buyer, here’s what actually happens. A home has been placed on the market for which the seller has established an asking price as well as other terms. In effect, this is an offer. At this point, you have three choices: accept the seller’s offer and create a contract; reject it and not make an offer; or suggest different terms and make a counter-offer. If you choose this last option, the seller may accept, reject or make a counter-offer.
No aspect of the home buying process is more complex, personal or variable than bargaining between buyers and sellers. This is the point where the value of an experienced REALTOR® is clearly evident because he or she knows the community, has seen numerous homes for sale, knows local values and has spent years negotiating realty transactions.
A house is shelter, but a home is far more. It’s where you live, relax, and entertain friends, raise families, and work. A home is where you spend much of your life, and so choosing a home is an enormous decision.
How do you know if a house is THE one? Probably the best approach is to look at as many homes as possible, something made easy with my website. You can quickly and easily view huge numbers of homes, check prices, take video tours and view extensive neighborhood information. I will then take you out to view the favorite homes you find. Selecting a home is an emotional and logical choice. I will guide you. You will know when you see the right house.
Making an Offer
As you go through this buying process, remember that everything is negotiable, and everything should be in writing. You should be very specific when you prepare your purchase offer, and the sellers should be equally specific when they issue their counter offer. A market analysis report lists the recent sale information of nearby homes, including how long each home stayed on the market, how close the asking price was to the actual sale price and other factors. It then compares the information regarding these houses with the one in question.
Don’t make a verbal offer.
Get a copy of your pre approval letter to your Realtor.
Earnest money proves to house sellers that you’re serious. After all, they’re going to take their home off the market on your behalf. Earnest money is typically between 1% -5% of the purchase price. The money should be held by your Realtor. A xerox of the check should be sent in with the offer to show that you are serious. Never give the money directly to the house seller. Such a deposit does not mean you’re bound to the contract. Your full deposit is credited toward the down payment and closing costs.
Once your offer is accepted, it becomes a binding contract, so be sure to include the necessary contingencies. Contingencies are clauses that, if not met, will render the contract null and void. Common contingencies are the sale being subject to approved financing, the sale of an existing home and/or a satisfactory home inspection.
You’ve made your offer. Now you need to have an expert verify exactly what you are purchasing. A formal inspection determines if anything needs to be repaired or replaced. The buyer pays for the inspection. Once you have a copy of the inspection you fill out a BINSR (buyers inspection and sellers response) form. You may now accept the house as is or give the seller the opportunity to correct disapproved items. Next the seller can agree to fix some or all the items. Finally the buyer can accept or reject the sellers proposal. If an agreement cannot be made the contract is cancelled and the buyer receives his earnest money back.
Escrow and Closing
When the closing is schedule, you are getting close to the finish line. At the closing, your seller officially signs over the title to the house. Your lender releases the purchase funds to the buyer, and of course, you sign reams of documents pledging to pay back your lender.
The escrow agent conducts the closing and is often affiliated with the title insurance company. Their job is to ensure the buyer obtains a clean title, the lender obtains a good mortgage, that the costs of the transaction are paid, that the seller’s mortgage is paid off, and that the seller receives their proceeds.
The escrow agent prepares a closing statement that outlines what the required funds are, who’s paying and where the funds are to be deposited. The agent will not disburse funds until they can guarantee that the above noted items have been taken care of.