Home Buying Process
Whether it’s your first home or your third, the homebuying process can be one of the most exciting, but sometimes also stressful,unsettling - experiences you ever go through. If you’re like most people,buying a home represents your single biggest investment – and debt.
Not only the housing market changes from season to season, but the process of searching for a house, making an offer, going thru home inspection,mortgage process and working toward closing evolves lots of over time.
For any homebuyer, you first need to account for your current financial situation, needs in a new home and what features and amenities you hope to have at your fingertips. Before you start touring houses, study online your local real estate market to get a better grasp of what’s available and within your budget.
With home prices rising across the U.S. and many markets reporting few homes available for sale compared to the number of buyers, it can be easy to get discouraged. It may take a little extra time to wait for the right house, or it may take some work to improve your credit but either way, we are going to help you find the best house possible.
There are many factors to consider and many decisions to make. That’s why, when buying, it’s crucial for you to have all the available resources necessary to make a well-informed decision, together with the time required to make complete use of them. That’s also why you should enlist the help of a trusted REALTOR® who’ll be able to provide you with expert consultation at each step of the buying process.
Here’s what you need to know to get from start to finish in your home purchase.
How to Pay For Your Home
The biggest determining factor in your ability to buy a home, of course, your ability to pay for it. While some people can liquidate assets and pay for a house in cash, most opt for mortgage programs through a bank, credit union or other type of lenders to leverage the total cost of the property.
The first steps to buying a house always revolve around the financial side of the deal – how much you can afford and how you plan to pay for it.
Getting a mortgage. Financing through a mortgage is the most common, and often the most attainable option to buy a house or condo. In fact, 88 percent of all buyers financed their homes in 2017, according to the National Association of Realtors.
It’s free to receive your credit report once a year through annualcreditreport.com, where you can access reports from the three major credit bureaus, which will provide you with all the information a lender will see about your financial history.
Most important is to take a look at your current financial situation, including the amount of money you have in savings, gross income, recurring expenses, existing debts and how much you’re able to put toward savings on a regular basis. From this, you should be able to determine how much you can comfortably spend on monthly mortgage payments.
Make Your Plans Given that buying a home is such a big step, it’s all the more important for you to educate and prepare yourself as much as possible in advance. This means clearly determining why you’re buying and what kind of home you’re looking for. And because buying and financing a home are so closely related, it also means examining your current financial situation and projecting how much you can afford.
Once you’ve answered these questions, even tentatively, you’ll be in a better position to research your housing and mortgaging options, as well as create an action plan and timelines for moving forward. You may want to do this yourself, but you may also benefit by consulting an experienced REALTOR® right from the start.
2. Define Your Goals, Research Your Options
3. Contact An Experienced Real Estate Agent/REALTOR®
Buying real estate is a complex matter at the best of times, given that there are so many factors to consider and no two homes or transactions are alike. However, with all the unique opportunities and potential pitfalls of the current market, it’s even more important for you to contact a REALTOR® once you’ve definitely decided to buy. In choosing a REALTOR® to guide you through the property search, financing, negotiation and transaction processes, you should consider their local market knowledge, experience and track record.
4. Get Pre-Approved For A Loan
Generally, it is recommended that you get pre-qualified for a loan before you start viewing homes with the serious intention of buying. The preapproval process involves meeting with a lender and authorizing them to examine your current financial situation and credit history. On the basis of this examination the lender will provide you with a document that details how much you can borrow to buy a home. You may want to consider looking online to see what different lenders offer, such as on MortgageMatch.com, or contacting your local bank or credit union.
You’ll have information about what you can afford and be able to plan accordingly
As a qualified, motivated buyer you’ll be taken more seriously when you make an offer on a home
Lenders can tell you whether you qualify for any special programs that will enable you to afford a better home (particularly if you’re a first-time buyer
Real estate financing is available from many sources, and we will be able to suggest lenders with a history of offering excellent mortgage products and services.
5. Start Viewing Houses And Select THE ONE
Simply put, key to the home search process is knowing what you’re looking for. Among other things, that means distinguishing between “must-haves” and “like-to-haves”. To help you to target your search and define your home preference priorities.
6. Put in an Offer
So you've fallen in love with a property that meets all of your needs and some of your wants—and it's within your price range. Let's make an offer!
But here's where it can get tricky: You don't want to low-ball your offer, and risk losing the home to another buyer or insult the seller—but you also don't want to pay more than is necessary. So how do you land on the ideal number?
While there are no hard-and-fast rules, a few factors can help inform your decision. You can research by your own or your Real Estate Agent can guide you.
First, look at other home sales in the area. Is the house you want priced reasonably in comparison? Did other homes sell for less or more than the asking price? If they sold for an amount that's comparable to your seller's list price, that's a good indication you should be offering a number close to asking.
Next, consider how long the home has been on the market, and how incentivized the homeowner is to sell. For example, if the seller is living in a transition home while waiting to sell, you may have a better chance of getting the seller to accept a discounted offer. But if he's casually putting the home on the market to see how much he can net, the seller may be more apt to wait for the perfect price.
Lastly, what's the market like in the neighborhood or city ?
7. Review the Contract
The seller accepted your offer—congrats! But before you sign on the dotted line, you should make sure to review the contract thoroughly and understand every single clause.
Pay special attention to contingencies in the contract, which spell out situations when you can back out of the sale to help protect yourself in case something goes wrong. For instance, such scenarios can include if you discover that the home has serious physical defects or if your bank rescinds financing.
8. Schedule a Home Inspection
Now is the time when you'll get the home inspected, which typically costs between $250 and $650. If there are issues, such as a non-functioning fireplace or an old HVAC unit, you may be able to ask for a price reduction to help cover the cost of repairs. And if you find any deal breakers, such as an unstable foundation or serious mold, you have the option of backing out now.
Once your inspector confirms that there are no big defects that could affect the home's value, you'll submit a mortgage application.
9. Submit Your Mortgage Application
It's time to start shopping for a mortgage lender with a reputation for good customer service and timely closings. You'll likely have a lot of questions—like how long the process will take and what the qualifying guidelines are—so choose a lender that answers them all satisfactorily.
Get an estimates of mortgage loan interest rate & closing costs from 3-4 lenders and compare them to find out who is giving best interest rate & closing costs that will save you lot of money! Review all closing costs—the ones you've hopefully saved up 3% to pay for, which might include an attorney's fee, title insurance and partial property taxes—before you sign the mortgage application.
Next, decide which mortgage makes the most sense for you. There are plenty of different options to consider. Although choosing one of the most common two: a fixed-rate mortgage, in which your interest rate remains steady for the duration of the loan, or an adjustable rate mortgage (ARM), in which your rate fluctuates to reflect market changes. Once you finalized lender, mortgage type, next step lock your rate and submit mortgage application.
10. Research Homeowner's Insurance
Your lender will likely require the name of the agency providing you with home insurance, which is why you should shop around for a quote for better premium rate and coverages.
Basic insurance typically covers fire, theft, storm damage and liability should someone get injured on your property and sue you. But you can also add on riders for things like expensive jewelry, furniture and home office equipment, as well as choose to get additional flood insurance if your home is in a flood-prone region.
11. Research Home Warranty Company
A home warranty is an annual service contract that covers the repair or replacement of important appliances and systems components in house that break down over time.
In general, home warranties cover the parts and components of major home systems and appliances. From HVAC systems to kitchen appliances, different plans help cover damage caused by everyday wear and tear. Get a plan details and annual cost from two different home warranty company and compare side by side.
Once you selected the company & plan, place an order to buy a warranty with specific closing date as effective date.
If seller is paying for home warranty cost as part of real estate transaction, provide the order/invoice details of warranty to closing company.
12. Final Walk Through & Closing!
Before the big day, you're entitled to a walk-through to confirm that nothing has changed since the inspection. After that, make sure you have all the money required for the closing to make certified check or wired into the correct account.
Ask the settlement agent for copies of all the paperwork you'll sign before closing, so you can carefully review them at your leisure. You'll be reviewing, including the HUD-1 settlement statement, which details all of the costs related to the home sale; the Final Truth-in-Lending Act statement, which outlines the cost of the loan and the interest rate; and your final mortgage paperwork.
On closing day, bring your photo I.D., as well as any paperwork you received throughout the home-buying process, including insurance and home inspection certificates.
Once you've signed the paperwork, you'll be handed the keys… and you'll officially become a homeowner! Congratulations!!!