The Home Buying Process

 

The first step to thinking like a mortgage professional is to understand the home buying process. That is, the series of events that take place from start to finish. Once you gain an understanding of this process, you'll start thinking like someone in the industry. It's really not as hard as you think, especially when you've got people working hard for you on each front. Just make sure you choose the right people, and always shop around. And remember, if you put yourself in a time crunch, you'll come out on the losing end.

 

All that said, the home buying process begins when a potential homeowner starts thinking about purchasing a piece of property. At this time, the potential homeowner would search available listings or hire an agent, and also figure out what is in their price range. Knowing what you can afford is a critical step in the process, and should be addressed long before the entire process begins. Otherwise you could just be wasting your time and money.

As soon as the potential homeowner has sought out the desired piece of property, they would need to make an offer to the seller. If the seller accepted the offer, a legally binding purchase contract would be written up, and the potential homeowner would need to put down a deposit. This offer would include a sales price, a down payment amount, a proposed closing date, and any contingencies agreed upon.

Adding contingencies to the purchase contract is essential. First, you'll want to add a contingency that states if you aren't able to obtain a mortgage in a certain time frame, you aren't liable to purchase the home. Another related contingency would require you, the buyer to secure a certain interest rate and term on that mortgage. It's a good idea to add this type of contingency to protect yourself against rising interest rates and unstable market conditions. After all, rates could jump and push the deal out of your price range.

An inspection contingency is another essential, as it allows the potential buyer to cancel the deal if the inspector finds anything wrong with the home. Required contingencies will also usually include termite and pest inspections, which nearly all lenders require.

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