EIGHT STEPS TO BUYING YOUR HOME
EIGHT STEPS TO BUYING YOUR HOME
1. Decide to buy
Although there are many good reasons for you to buy a home, wealth building ranks at the top of the list. We call home ownership the best “accidental investment” most people will ever make. But we believe when it is done right, home ownership becomes an “intentional investment” that lays the foundation for a life of financial security and personal choice. There are solid financial reasons to support your decision to buy a home, and, among these; equity buildup, value appreciation, and tax benefits stand out. Base your decision to buy on facts, not fears.
- If you are paying rent, you very likely can afford to buy- there are plenty of down payment assistance programs out there you may be eligible for.
- There is never a wrong time to buy the right home. All you need to do in the short run is find a good buy and make sure you have the financial ability to hold it for the long run.
- The lack of a substantial down payment doesn’t prevent you from making your first home purchase.
- A less-than-perfect credit score won’t necessarily stop you from buying a home. Lenders look for 640 & above. You can work with a lender toward repairing many of the issues that could be keeping your credit low.
- The best way to get closer to buying your ultimate dream home is to buy your first home now. Your first home doesn’t need to be your last home!
- Buying a home doesn’t have to be complicated- there are many professionals who will help you along the way.
2. Hire your agent
The typical real estate transaction involves at least two dozen separate individuals-insurance assessors, mortgage brokers and underwriters, inspectors, appraisers, escrow officers, buyer’s agents, seller’s agents, bankers, title researchers, and a number of other individuals whose actions and decisions have to be orchestrated in order to perform in harmony and get a home sale closed. It is the responsibility of your real estate agent to expertly coordinate all the professionals involved in your home purchase and to act as the advocate for you and your interests throughout.
While you may find the thought of home ownership thrilling, the thought of taking on a mortgage may be downright chilling. Many first-time buyers start out confused about the process or nervous about making such a large financial commitment. From start to finish, you will follow a six-step, easy-to-understand process to securing the financing for your first home.
Six Steps to Financing a Home:
- Choose a loan officer (or mortgage specialist)
- Make a loan application, supply documents and get preapproved
- Determine what you want to pay and select a loan option
- Submit to the lender an accepted purchase offer contract
- Get an appraisal and title commitment
- Obtain funding at closing
You may think that shopping for a home starts with jumping in the car and driving all over town. And it’s true that hopping in the car to go look is probably the most exciting part of the home-buying process. However, driving around is fun for only so long-if weeks go by without finding what you’re looking for, the fun can fade pretty fast. That’s why we say that looking for your home begins with carefully assessing your values, wants, and needs, both for the short and long term.
Questions to ask yourself:
- What do I want my home to be close to?
- How much space do I need and why?
- Which is more critical: location or size?
- Would I be interested in a fixer-upper?
- How important is home value appreciation?
- Is neighborhood stability and priority?
- Would I be interested in a condo or townhome?
- Would I be interested in new home construction?
- What features and amenities do I want in the home & community? Which do I really need?
When searching for your dream home, you just that – a dreamer. Now that you’re writing an offer, you need to be a businessperson. You need to approach this process with a realistic perspective of your market. The three basic components of an offer are price, terms and contingencies (or “conditions”).
Price – The right price to offer must fairly reflect the true market of the home you want to buy. Your agent’s market research will guide this decision.
Terms- The other financial and timing factors that will be included in the offer. Terms fall under six basic categories in a real estate offer:
- Schedule – A schedule of events that must happen before closing.
- Conveyances – The items that stay with the house when the sellers leave.
- Commission – The real estate commission or fee, for both the agent who works with the seller and the agents who work with the buyer.
- Closing Costs – It’s standard for buyers to pay their closing costs, but if you want to roll the costs into the loan, you need to write that into the contract.
- Home Warranty – This covers repairs or replacement of appliances and major systems. You may ask the seller to pay for this.
- Earnest Money – This protects the sellers from the possibility of the buyers unexpectedly pulling out of the deal, and makes a statement about the seriousness of your offer.
Unlike most major purchases, once you buy a home, you can’t return it if something breaks or doesn’t quite work like it’s supposed to. That’s why homeowner’s insurance and property inspections are so important.
A homeowner’s insurance policy protects you in two ways:
- Against loss or damage to the property itself
- Liability – In case someone sustains an injury while on your property.
- Your major concern is structural damage.
- Don’t sweat the small stuff. Things that are easily fixed can be added to a honey-do list.
- If you have a big problem show up in your inspection report, you should bring in a specialist. If the worst-case scenario turns out to be true, you might want to walk away from the purchase. This is your opportunity to do so and retain your escrow deposit.
You will have a few preclosing responsibilities:
- Stay in control of your finances.
- Return all phone calls and paperwork promptly to both lender & agent.
- Communicate with your agent at least once a week.
- Several days before closing, confirm with your agent that all your documentation is in place and order.
- Obtain certified funds for closing. Bring a photo ID & one other form of ID to closing.
- Conduct a final walk-through.
- Finalize your mortgage
- Pay the seller
- Pay your closing costs
- Transfer the title from the seller to you
- Make arrangements to legally record the transaction as a public record
8. Protect your investment
Throughout the course of your home-buying experience, you’ve probably spent a lot of time with your real estate agent and you’ve gotten to know each other fairly well. There’s no reason to throw all that trust and rapport out of the window just because the deal has close. In face, your agent wants you to keep in touch.
Even after you close on your house, your agent can still help you:
- Handle your first tax return as a home owner
- Find contractors to help with home maintenance or remodeling
- Help your friends or family find homes
- Keep track of your home’s current market value
Home maintenance falls into two categories:
- Keeping it clean: Perform routine maintenance on your home’s systems, depending on their age and style.
- Keeping an eye on it: Watch for signs of leaks, damage, and wear. Fixing small problems early can save you big money later.