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Purchasing a home is one
of the biggest decisions most people will make in
their life. It involves a long-term commitment
financially and emotionally, but it can also be a
very exciting and rewarding experience.
When buying a new home,
there are a few things to consider:
·
What monthly payment can I afford?
·
What am I looking for in a home?
·
Should I work with a REALTOR®?
·
Once I find a home to purchase, what do I need
to do next?
·
How much cash do I need at closing?
·
How do I obtain a mortgage loan?
Before
You Begin Your Search
Before you actually
begin the process of looking at homes, you should
complete the following:
Get Pre-Qualified:
Unless you are able to pay cash for your home, most
buyers will need to go through the process of
applying for a mortgage. By contacting a mortgage
loan specialist before you begin your search, you
are able to determine the amount of loan for which
you qualify. Typically, a borrower is pre-qualified
for a loan that amounts to 28%, or less, of their
gross monthly income. In addition, if you know the
amount of the monthly payment you would be
comfortable paying, a mortgage specialist can
calculate the price range for your home search.
Getting pre-qualified for a loan also increases your
chances of your offer being accepted. A seller is
more likely to accept an offer from a buyer who
already has funding versus one who still needs to
get a loan.
Prior to getting
pre-qualified, you should obtain a copy of your
credit report so that there are not any negative
surprises when you are ready to apply for your loan.
Correct any errors that you may discover on your
credit report. Also, you will want to reduce your
consumer debt as much as possible by paying down
credit card balances.
By going through the
pre-qualification process, your mortgage specialist
can provide you with an estimate of how much cash
you will need for the sales transaction. Cash is
needed for the down payment, earnest money, and
closing costs of the transaction.
Make an Amenities List:
Decide what features are most important to you in a
home. By establishing your criteria, you will save
time shopping for homes that do not meet your needs.
Also, consider what locations you are interested in.
When making an amenities list, determine which
criteria you absolutely cannot live without and
which ones you are willing to budge on.
Some typical criteria
may include:
·
Price range
·
Neighborhood or subdivision
·
School districts
·
Proximity to work
·
Proximity to shopping, restaurants, hospitals,
etc.
·
Number of Bedrooms
·
Number of Bathrooms
·
Storage space
·
Garages
· Lot
sizes
·
Pools
Choose An Agent:
Once you have decided on the price range and the
features you are interested in, your next step will
be to decide whether you will search on your own or
use the services of a real estate agent. If you
choose to use an agent, make sure you enter into a
Buyer’s Agency Agreement. This ensures that the
agent will represent you, as the buyer, in the
selling process, and not represent the interests of
the sellers.
Talk to friends and
family for their referrals of agents they have
worked with. Once you have some names, interview
several agents before making a final decision.
Select a REALTOR® that you trust and with whom you
feel comfortable working.
Remember, there are no
out-of-pocket fees that you pay to the buyer’s
agent. These costs are incurred by the seller. Your
agent will research property listings for potential
matches to your criteria and schedule showings for
you at a convenient time. In addition, they will
provide guidance to you during the contract
negotiation phase of the selling process. Many
times, they will also coordinate and schedule the
home inspection, appraisal, and closing for you, as
well as provide you with referrals for mortgage
lenders.
Beginning Your Search
Once you have selected
an agent and determined what you are looking for in
a home, it is time to begin your active search for
homes that interest you. Based on your criteria that
you provide your REALTOR®, he/she will be able to
search their listing database for homes that meet
your needs.
While visiting
properties that are on the market, compare homes.
Every home is unique! Even if every home you visit
has all of the main criteria you are looking for,
each will have different characteristics. Bring your
Amenities Checklist with you to all homes that you
visit. Check off which features each house has. Make
notes on each home of what you like and dislike.
Additional things to
consider when touring homes:
·
Cost of upkeep and utilities
·
Amount of maintenance required
·
Cost of updating or decorating
·
Homeowner’s dues
·
Traffic patterns in the neighborhood
Taking notes and using
your checklist will help you later when you can sit
down and compare properties. By comparing notes,
this will help to prevent you from making an
emotional and impulsive decision.
Making
an Offer
Once you have found your
dream home, it is time to prepare an offer to
purchase. Your buyer’s agent can provide guidance to
you on the price you should offer to pay for the
property. Have your agent compare prices for similar
homes that have sold in the area recently. This will
help you to determine a reasonable price to offer.
In addition to the
selling price, the other items to include in the
terms of the Offer to Purchase include:
· The
amount of earnest money (deposit) to offer.
·
Concessions that you want the seller to make,
such as a carpet or paint allowance, or payment
towards the closing costs.
·
Home inspection contingencies.
·
Financing contingencies.
· A
clear definition as to what is to be included
with the home, such as appliances or window
treatments.
· A
closing date.
Don’t be surprised if
your initial offer is not accepted. Your REALTOR®
will represent you in all contract negotiations
until an agreement is reached between the seller and
you.
Closing the Deal
Once your offer has been
accepted, it is time to work on the final details of
purchasing your home. There are several tasks that
will need to be accomplished during this phase of
the sales transaction:
Home Inspection:
Arrange to have a professional come out to
inspect your home. They are able to spot electrical,
plumbing, and structural problems that may not be
noticeable to you at first glance. The home
inspection is not required, but it is in your best
interest to have one done on the home so that you do
not receive any surprises once you move in. This is
an expense incurred by the buyer and is included in
your closing costs.
You may also need to get
a pest inspection on the property to make sure there
is no structural damage to the property caused by
termites. Your REALTOR® can usually make a
recommendation of a reputable inspector.
Apply For A Loan:
Once an offer has been accepted, you will need
to contact your mortgage specialist to officially
apply for a loan.
Items that you will need
for your loan application include:
·
W-2s and/or tax returns from the past 2 years.
·
Proof of gross monthly income for the past 30
days.
·
Proof of investment income, including rental
incomes.
·
A list of creditors, including account numbers,
balances, and monthly payments.
·
Two months worth of banking statements.
The Final Walkthrough:
Prior to closing, you should be given access to
the house so that you can walk through and give it a
final inspection. This should be done as close to
the closing date as possible, preferably on the
morning of the closing proceedings. When you go to
do your final walkthrough, your home inspector will
not be with you. It is your responsibility to
inspect the home and ensure that everything meets
your approval.
Things to look for
during your walkthrough:
·
The seller has repaired items included on the
purchase agreement.
·
The house is in "as-was" condition (everything
is in the same condition as it was when you
signed the purchase agreement).
·
The house is vacant and clean. The home does not
have to be spotless, but there should be no
remaining trash or junk left behind in the house
or in the yard.
·
Tenants have moved out prior to your closing
unless you have agreed for them to stay.
Closing:
Usually at the time an offer is accepted, or after
you have a commitment from your lender, a date and
time will be arranged for your closing. The closing
procedures will be handled by an attorney of your
choosing. The day before, you will be told the total
dollar amount you will need to bring to closing by
the closing attorney. They will also provide you
with any additional information you may need to
prepare yourself for the proceedings.
On the day of closing,
remember to bring:
·
A certified check for the total amount of your
closing costs.
·
A picture ID, such as a driver’s license.
·
Your personal checkbook.
·
Evidence of mortgage insurance (if this
information has not already been requested).
During the closing,
details of the sales contract will be explained to
you. If everything meets your approval, you will
sign the contracts to finalize the deal.
Congratulations! You are now a new homeowner!!!!!! |
