Buying a home is a big step and who wants to go about it in the wrong way? Whether you are a first time home buyer or you're a seasoned home buying veteran, the steps in buying a home can help you save time and energy. While home buying situations differ for the each buyer, these general flow of steps will help you keep your sanity and enjoy buying your next place. Before you think of buying a home check out these 15 steps to getting you closer to your new address!
1.) Choosing a Realtor: It is suggested that you find a Realtor to represent you and help you through the buying process. Realtors have the experience in the real estate business and understand the volatile home buying market. Try and find a Realtor from a referral or ask neighbors that have their home for sale if they are happy with theirs.
2.) Deciding to sell 'By Owner': If you don't wish to have a Realtor represent you, it is important to have background and knowledge in the home buying process. Many online resources help teach you the process and there are now services that home sellers can pay to have their home in the MLS Listings (Multiple Listing Service). The upside of selling by owner (For Sale by Owner - FSBO) is that you will keep Realtor fee out of your profit and therefore into your pocket. The downside is now you are responsible for showing your house, meeting with other Realtors, contractual information, etc...There are real estate attorneys that you can hire to review contractual information if you so choose.
3.) Determine how much you can afford: Take an honest look at your financial situation and determine how much you can afford to spend on your next home purchase. Take in to consideration you may have this mortgage for 15-30 years, so plan wisely. If you are unsure how to determine this, go online and search for mortgage and home budget calculators.
4.) Search for a good lender: Similarly to finding a Realtor get referrals of good lenders that friends have used. The term 'good' is going to also be swayed by how well your credit and payment history is. Keep in mind, although a lender may be good, your opinion may change if you don't agree with what information they tell you.
5.) Get pre-approved before you search for homes: One of the most common mistakes home buyers make is searching for a home before they know how much a bank will approve them for. Once you have chosen your lender they will put financial and credit history from you to see how much they are willing to lend. Once you are pre-approved you can start the home looking process with confidence and accurate information. Ask your lender how long the pre-approval terms are valid, as you will have to get another pre-approval if you let too much time pass before finding a home.
6.) Choose a home: When searching for a home you need to fall in love with the aesthetics but also its functionality. Beauty in your new home is important but the floor plan and how the rooms flow may be more important. When visiting homes discuss with your family how the house will work with all family members to ensure a perfect fit.
7.) Make an offer on a home: Once you've chosen a home it is time to put in writing what you plan to offer the seller. Talk over with your Realtor the comparable sales in the area and decide on the amount you will present. If you aren't using a Realtor you will need to research how to make offers and meet with the sellers' Realtor to determine what forms will be accepted.
8.) Waiting for the mortgage company: Once your offer has been approved the mortgage company will start processing the loan information. It is in your best interest to work diligently with the mortgage company to gather pay stubs, bank account information and other financial paper work to forward to the bank. Make copies of all personal information before submitting.
9.) Home Inspection on your new home: Before you sign on the dotted line and get the keys to your new home, you need to get a home inspection performed. Use a reputable home inspection company and schedule a time you and the inspector can visit the home. The inspector will walk through the home and inspect the structural, electrical, mechanical, plumbing and architectural components of the home. If the inspector finds problems with the home, you should go back to the home seller and ask them to revise their asking price, or pay for the repairs.
10.) An appraisal will be ordered by the lender: Your future home will need to appraise at the asking price or higher in order for the lender to lend the desired amount to purchase the home. If the appraisal on the home comes back lower than the asking price, the seller has the option of lowering the price to the appraised price.
11.) The home lender will now confirm you are approved for your loan: This step is due to the paperwork that was asked of you when you first found the home. The home lender will notify you if there's missing information that will not allow them to fully grant your approval.
12.) Determine insurance companies to use: Your home will need home insurance to protect your belongings and physical home. Additional insurance can include: hazard, flood, hurricane or other regional insurances in your area. Your lender will need the information for these well before the closing date.
13.) Walk through your new home before closing: If any home repairs are needed from the home inspection, they should all be complete and you should view 48 hours before the closing. For lingering issues the buyer or buyer's Realtor should be contacted immediately.
14.) Closing on your new home: On the day of closing you will be responsible for bringing your down payment check, and any other information the mortgage company asked you to supply at the day of closing. Title, insurance and miscellaneous fees will be paid, and the buyer and seller will sign paperwork. Keys will be given to you at the end of the closing meeting. If possible, go try out the door keys immediately following the closing to ensure they work.
15.) In following weeks/months: Your mortgage company will send you mortgage note information and you will receive title and deed information. Fill out appliance home warranty information and send it to manufacturers to accurately represent your move in time. All that's left is to enjoy your new home!
The home buying process can seem long and tedious. With a positive attitude and proper planning, your new home is in your grasp. Follow these steps and consider hiring a Realtor if you aren't experienced with the home buying process. Your home is your castle, take the time and choose wisely and your family will reap the rewards for generations to come. Freshome readers are you intimidated by the housing market? Tell us what makes the process easy or hard for you and your family.