The Home Buying Process
Steps to Buying a Home
Step 1: Find the Right Agent
Buying a home is one of the most significant purchases in a lifetime. It is essential to have an experienced agent in your corner, always looking out for your best interest. A buyer agent’s fiduciary responsibility is to represent the buyer and to ensure that they are protected. After all, a seller has someone in their corner. A listing agent has an allegiance to the seller. Their goal is to get the seller top dollar for their home. There is incredible value in having someone working for YOUR best interests when buying a home.
Step 2: Prepare Your Finances
HOW MUCH HOME CAN YOU AFFORD:
Mortgage lenders recommend you do not buy a home that is more than 3 to 5 times your annual household income. If you are not purchasing a home with cash, you will need a mortgage pre-approval provided by your mortgage lender. A lender will work with you to get a loan that meets your needs. Some buyers are concerned with keeping their monthly payments as low as possible, others want to focus on the right amount to bring to closing.
CHECK YOUR CREDIT:
A mortgage requires a good credit score. You can improve your score by: •Paying down credit card balances •Continuing to make payments on time •Avoid applying for any new credit or car loan until you have been approved •Avoid making big purchases until you have been approved •If possible, avoid job changes until you have been approved
SAVE CASH FOR A DOWN PAYMENT & OTHER EXPENSES:
In order to make your dream of buying a home a reality, you will need to save cash for your down payment, earnest money, closing costs, escrow & home inspector.
•A Down Payment is typically between 3% & 20% of the purchase price •Earnest Money is money you put down to show you’re serious about purchasing a home. It’s also known as a good faith deposit. •Closing Costs for the buyer run between 2% & 5% of the loan amount •Escrow is an account within your mortgage to cover expenses for taxes, insurance, and possibly HOA •A Home Inspection costs $400 to $800
Step 3: Get Pre-Approved With A Credible Lender
Being pre-qualified is the first step of a lender agreeing to provide you a loan - it typically comes with conditions of verifying documents. Getting pre-approved means the lender and their team (including underwriting) have reviewed your documents and approved you for a specific loan amount. Required documents include financial information such as income, statements, assets, debt & credit reports etc.
Step 4: Start Home Shopping
Start touring homes in your price range Time to start shopping! We will take notes on all the homes we visit. It can be hard to remember all the details of each home, so take pictures or videos to help you remember each home, and review the notes you have written. Once we have found THE house for you, we will present an appropriate offer based on recent sales and current buyer activity in the area, as well as the value of the property in its current condition. Negotiations may take place after the offer is presented.
Step 5: Make an Offer on the Home
WHEN TO MAKE AN OFFER:
So you have found THE house! Congrats! We will discuss the current market conditions and what makes the best offer for you. It is always good to not wait if you really like the house.
HOW MUCH TO OFFER:
We will sit down and look at recent sales and current buyer activity in the area, as well as the value of the property in its present condition. Putting all this information together, we will determine the price that you would like to offer.
SUBMITTING AN OFFER
There are some components to an offer that makes it more appealing to the sellers.
•Put Your Best Foot Forward
We will work together to discuss your options and create your very best offer. Depending on the circumstances, you may have only one chance to make a good impression.
•Put Down a Healthy Earnest Deposit
A large earnest money deposit shows the seller you are serious
A transaction that is not dependent on receiving loan approval is more attractive to a seller
•Shorter Inspection Periods
Try shortening the inspection period to 10 days
•Write the Seller a Letter
We will make your offer stand out by writing a personal letter to the seller, explaining why you fell in love with their home.
•Offer to Close Quickly
Many sellers prefer to close within 30 days.
Step 6: Order An Inspection
During the inspection period, we will schedule an inspection with a reputable home inspector to do a thorough investigation of the home. Once this is complete, the inspector will provide us with a list of their findings. You can take the issues as-is or request the seller to address some or all of the findings. We will be mindful and reasonable on smaller items while being very cautious and vigilant of potentially significant issues.
Step 7: Negotiate Final Offer - if needed
Issues typically arise after the home inspection, and those issues tend to result in another round of negotiations for credits or fixes. 1. Ask for credit for the work that needs to be done. Likely, the last thing the seller wants to do is repair work. 2. Think “big picture” and don’t sweat the small stuff. A tile that needs some caulking or a leaky faucet can easily be fixed. Repairs are still up for negotiation and perhaps a small credit would help with closing costs.
Step 8: Appraisal Ordered
Your lender will arrange for a third-party appraiser to provide an independent estimate of the value of the house you are buying. The appraiser can value the house above the offer price, at the offer price, or below the offer price. If the house appraises below the offer price, this initiates another negotiation point. Once the appraisal process is settled, the loan file then moves on to the mortgage underwriter. If approved you will receive your final commitment letter that includes the final loan terms & percentage rates.
Step 9: Scheduling Your Move
We will provide the lender with your purchase contract so they can begin their process. Schedule the Home Inspection. Lender will get your payment for the appraisal. Title company will begin its process. Declutter! Sort through every drawer, closet, cupboard & shelf, removing items you no longer need or like. Donate or sell items that are in good condition. Get copies of medical records and store them with your other important documents. Create an inventory of anything valuable that you plan to move. Get estimates from moving companies. Give your notice if you are currently renting. Schedule movers/moving truck. Buy/find packing materials.
Secure Home Warranty. Get quotes for home insurance. Schedule time for closing. Contact utility companies (water, electric, cable). Change address: mailing, subscriptions, etc. Minimize grocery shopping. Keep on packing. Obtain certified checks or prepare a wire for closing. Schedule and attend a final walkthrough. Finish packing. Clean. Pack essentials for a few nights in your new home. Confirm delivery date with the moving company. Write directions to the new home, along with your cell phone number.
Step 10: Closing Day!
Closing is when you sign ownership, mortgage, and insurance paperwork and you receive your new home’s keys! Typically, the closing takes about 30min to an hour. It is performed by a notary or an attorney with the title company. You will need to bring a valid ID. Your lender and title company will let you know what payment to bring with you as well or how to prepare for a wire.
Lenders are required to provide you with a closing disclosure, at least three days before closing. This will show you what your final loan terms and closing costs will be. It has to be signed and delivered back to the lender three days before the closing. This step is done to ensure that there are no surprises at the closing table. If there is a significant discrepancy between the loan estimate and the closing disclosure, we must notify your lender and title company immediately.
We will do a final walk through the home within 36 hours of closing to check the property’s condition. This final inspection takes about 30 min. We will make sure any repair work that the seller agreed to make has been done.
Who will be there: • Your agent • The seller • The seller’s agent • A title company representative • Your loan officer • Any real estate attorneys involved in the transaction The closing typically happens at the title company. You will be signing lots of paperwork so get your writing hand warmed up! Some of the papers you will be signing include: the deed of trust, promissory note, and other documents.
Closing costs can vary depending on your home’s purchase price and where you are located. You can generally expect your closing costs to be around 3% to 4% of the home’s sales price. These closing costs can sometimes be shared with the seller.
BRING TO CLOSING:
• Government-issued photo ID • Cashier's check if you need to bring funds under $10k RECEIVE YOUR KEYS Congratulations! It was a lot of hard work but you are now officially homeowners!! Time to throw a party and get to know your new neighbors!