When buying a home, there are several steps that go into the transaction, but we’ll make sure to coordinate things so you’re taken care of and the transaction goes as smoothly as possible.
Some things to keep in mind when buying; we are here to help so don’t hesitate to ask us any questions you have- often, we can recommend service providers to help in areas outside of our expertise- choosing the right loan officer can make a big difference in the interest rate and terms you receive, ask us for referrals- let us assist you in determining what different properties are worth, so you make a good investment.
What can you afford?
The first thing you need to decide is how much you can afford. Determining this early in the buying process will save you a lot of time and frustration. You will know what is in your price range and what is not.
Get pre-approved for a mortgage – Once you have your credit scores in the best shape possible, and with your down payment securely settled in your savings account, gather your earnings statements and get pre-approved for a mortgage. Not only will this give you a reality check on exactly how much house you can afford, but the pre-approval also gives you a strong platform for negotiating the best price. Sellers want to know you are serious. The pre-approval proves that you are. Beginning your home sear
Conducting The Search
Using your home-search priorities as a guide, start looking for houses you can afford in the neighborhoods that best suit your needs.
Multiple Listing Service – Be sure to view the details on all listings that meet your search criteria, and keep a log of the houses you are interested in. This will help you stay organized and remember what you’ve seen. Once you’ve found a house that looks promising, you will want to research the price parameters of recently sold, similar houses. This will ensure that you are making an offer consistent with recently completed sales – and it increases the chance that your offer will be confirmed by the appraiser your lender will assign to confirm the validity of the deal.
Making an Offer
As you go through this buying process, remember that everything is negotiable, and everything should be in writing. You should be very specific when you prepare your purchase offer, and the sellers should be equally specific when they issue their counter offer. A market analysis report lists the recent sale information of nearby homes, including how long each home stayed on the market, how close the asking price was to the actual sale price and other factors. It then compares the information regarding these houses with the one in question.
Don’t make a verbal offer.
Don’t offer full price unless the home is a real steal. You need room to negotiate.
Include a home inspection contingency. This enables you to cancel the deal if you inspector unearths major problems that can’t be fixed efficiently or economically.
Secure financing before making an offer, if possible.
Earnest money proves to house sellers that you’re serious. After all, they’re going to take their home off the market on your behalf. Earnest money is typically between 1% -5% of the purchase price. The money should be held by an attorney or title company in escrow. Never give the money directly to the house seller. Such a deposit does not mean you’re bound to the contract. Your full deposit is credited toward the down payment and closing costs.
Once your offer is accepted, it becomes a binding contract, so be sure to include the necessary contingencies. Contingencies are clauses that, if not met, will render the contract null and void. Common contingencies are the sale being subject to approved financing, the sale of an existing home and/or a satisfactory home inspection.
Home Inspections
You’ve made your offer. Now you need to have an expert verify exactly what you are purchasing. A formal inspection determines if anything needs to be repaired or replaced. Be sure the purchase contract spells out who pays for the inspection and how you will work out with the seller who covers any necessary repairs. The contract should also include a contingency in case the inspection reveals flaws that cannot be resolved with the seller.
Escrow and Closing
When the closing is schedule, you are getting close to the finish line. At the closing, your seller officially signs over the title to the house. Your lender releases the purchase funds to the buyer, and of course, you sign reams of documents pledging to pay back your lender.
The escrow agent conducts the closing and is often affiliated with the title insurance company. Their job is to ensure the buyer obtains a clean title, the lender obtains a good mortgage, that the costs of the transaction are paid, that the seller’s mortgage is paid off, and that the seller receives their proceeds.
The escrow agent prepares a closing statement that outlines what the required funds are, who’s paying and where the funds are to be deposited. The agent will not disburse funds until they can guarantee that the above noted items have been taken care of.