So, you have finally decided that it is the right time to buy a house, but where do you start? Do you know what will happen during the process? Buying a house can be a scary process. If you don’t like it down the road, there is no return policy. There is no refund. There is no ”30 money back guarantee”. Wouldn’t that be nice?
STEP 1: DECIDING TO BUY A HOUSE
Now that you have decided that buying a house is the right purchase for you, knowing the process will be helpful. Your real estate agent should walk you through these steps upon hiring them. They should be educated and knowledgeable when it comes to the step-by-step process. What are you looking for? Do you have children? Do you plan on expanding your family?
I know you’ve heard this before but LOCATION LOCATION LOCATION really is important. The distance to shops, medical facilities, and schools may be important at different levels for each person. Is the home located near the ocean? Having a house that has an easy relocation map during a crisis such as a hurricane may be necessary. Is the home on an island? Taking a ferry to and from work may not be the best option for some. Sometimes highly desirable neighborhoods may also have high markups.
Making one of the biggest financial decisions you will ever make is the first step. Knowing if you can financial sustain the house is the next step.
STEP 2: START SAVING
Creating a budget for your finances is always a smart idea. Do you know what your debt to income ratio is? If you have higher debt than your income coming in, you will drowned in bills, notices, evictions, and a negative credit score. Be prepared for you potential lender to ask if you have had any late payments or collections.
Wether you have good or bad credit, knowing your score is important to know where you stand. If you need help with credit repair contact me directly and I can get you in touch with someone who can help. I would also be happy to supply you with a budget sheet to keep you and your family’s expenses in once place.
STEP 3: FIND A REALTOR
Finding the perfect realtor in your area may be a little bit overwhelming. Especially when every agent claims to be “the top agent” in your area. “Professional negotiator”, “certified in this and that”, etc. Do your research. Do not settle when it comes to your real estate professional. Ask for proof of these qualifications. Ask for their references. Interview each of them if you feel that is what you should do. Relying on someone to assist you in the major decision is a top priority. Do not let your agent be the reason you don’t get to live in the home of your dreams. Find yourself an agent with experience, patience, and a willingness to help you through this process.
Keep in mind that not all real estate agents are Realtors®️. A Realtor is a special designation that a real estate agent can get for being members of the National Association of Realtors®️. These agents follow a strict code of ethics they must abide by.
STEP 4: FIND A LENDER. GET PRE-APPROVED.
You can look into finding a lender before you even speak with an agent. Although, a lot of agents have connections to many local lenders that you can chose from. Lender’s will tell you if you are even eligible to qualify for a mortgage.
Before you make an offer on a house, many sellers require you to supply proof of pre-approval. You will need to gather a few documents to supply to the lender. Be prepared to supply:
proof of income
proof of assets
social security numbers
STEP 5: FIND THE HOUSE
Here comes the fun part. THE HUNT. Know what you are looking for. Make a list of ”must haves” and let your agent know what you do not want. When it comes to looking at a house for the first time there are a lot of things to consider. Sometimes you may focus on what is missing and not what is actually possible. Everyone has a different style and different needs. Just remember that a lot of these things you may not like are cosmetic things. If the home does not have a major necessity on your list then it may not be the one for you. The whole purpose of viewing a home is to find out if that home is really for you. Photos are not always reliable.
There are many search engines available to you online or even through your phone. Many agents have their own apps for you to use for your home search. They are linked to their local MLS (Multiple Listing Service). That just means that the homes are updated in real time. Other sites such as zillow.com or realtor.com can take up to 72 hours to update a home that has gone under contract or sold.
STEP 6: SUBMIT AN OFFER
Now that you have found a property...What do you do? You make an offer. This is a very important step that your agent will need to be experienced in. They will walk you through this step by step, explaining what to expect and what your best options may be.
Contingencies can be your best friend. For example, a neighborhood contingency is commonly used. If you do some research on the home after your offer is accepted and you learn that the home is located in a major flood zone, or there is a train track you didn’t know was close by, you have a chance to back out and move on to another property that may suit your lifestyle better.
Once you submit your offer the seller has a chance to accept, counter offer, or reject your offer all together. An agent’s negotiation skills are used at this point to help you negotiate the contract in your best interest. This is where it is important which real estate agent you chose to hire. Once you and the seller agree on all terms, your contract goes mutual.
*Most agents do not charge the buyer a fee so you don’t really have anything to lose by using an agent.
STEP 7: INSPECTIONS AND APPRAISALS
This is the time to find out everything about the house that you can. This is the immediate step after your offer is accepted. General home inspections, pest inspections, well/septic inspections, and anything else that may be brought to your attention. Once the inspections are complete, you have the chance to request certain issues to be corrected and paid for by the seller. This requires smart negotiations. The whole deal has been known to fall apart because someone is unwilling to complete a small or large task.
The appraisal is the process of property valuation or land valuation, where an appraiser has an unbiased professional opinion of the value of a home. Appraisers typically look for general condition of the home, the materials and conditions of the foundation, walls, exterior, windows, gutters, etc. The appraisers valuation is compared with “like” homes in the immediate areas.
*During this time is when you will be submitting all of your documents for loan approval.
STEP 8: CLEAR TO CLOSE
Once the home valuation is released, the inspections and appraisals are completed, and all of your loan documents are turned in all you do is sit back and wait until you hear the words, from your agent, “clear to close”. Have you ever heard that term before? In the real estate world, that term is gold. It doesn’t always mean that nothing can happen to your contract. You always need to be aware of the what ifs.
Clear to close means that an underwriter has approved your loan documents and that any conditions that were required are now met. It also means that your lender is ready to confirm your closing date.
*Do NOT buy anything major or apply for ANY loan during the home buying process.
STEP 9: SIGING
In all reality, this step is the final step. This step finalizes the agreement made between a buyer, seller, and your lender for the purchase of your home. You will be contacted to set up a date to sign all of the documents that went along with the deal. Signing the documents legally transfers ownership from the seller, and you become the new owner of the property.
STEP 10: RECEIVE YOUR KEYS
Depending on how it is done in your state or residence, you may receive your keys at closing or you may receive keys by that evening.
You are a new home owner!
Now it is moving day! Make plans for your moving truck/company in advance. There are a lot of fears and complications that come along with home ownership. If you are ever concerned, need questions answered, or need a few resources ... feel free to contact me at any time!