Buying a home? What is the process?

By
Real Estate Broker/Owner with Cornerstone Business Group Inc 0225086119
https://activerain.com/droplet/564W

Buying a home? What is the process?

Buying a home is one of the most exciting and sometimes horrifying experiences adults Buying a home? What is the process?face. It can be exhilarating in the beginning, labor intensive in the middle and exhausting by the end. Some deals just go that way, but not every deal needs to wear you out by the end. If you are armed with information, buying a home can be a smooth and fun experience. Let me show you how.

Buying a home: Step 1

The first step in buying a home is financial. You need to know where you are financially to make an offer on a home. The process starts by looking at your finances and determining if you're in a place to buy a home. You may be able to do that with a lender, but you can also talk to a credit counselor to figure out what your financial commitments tell you about a near future home purchase.

Most lenders are happy to sit down with you and talk about what your financial capabilities are when you hope to buy a home. You'll want to make sure you have enough income available to make your mortgage payment while continuing to pay your utilities, car payments, student loans, etc. A lender can help you find out what is left once you pay your monthly reoccurring debts.

If you keep your steps in order, you'll end up with a great result, but if you mix them up, you may end up frustrated and disappointed. If you call a Realtor first and the Realtor says you need to talk to a lender first, trust her. You've got to know your numbers before you go shopping.

Make sure the lender you work with is a reputable lender with good references. I worked with a young couple in 2016 that had an online lender's pre-qualification letter when we met. I looked at their pre-qualification letter amount and it seemed a lot higher than a young couple with one income and an entry-level job would have. It was.The letter led them to make an offer on a home that was nearly $100,000 over their credit-worthiness. They were crushed, and I was sad for them because they needed a home to meet their growing family's needs. I became suspicious of the first lender letter as we worked together and talked about their finances. I asked them talk to a local lender, and they did. Sadly, he discovered a huge discrepancy in their online pre-qualification letter and their reality. You've got to know your numbers. Once you know what you can afford in a mortgage, you know what you can offer for a home. THEN it's time to talk to a Realtor.

Buying a home: Step 2

Now, it's time to find a Realtor. Once you know what you can spend, you can start searching for a home that meets your wants, needs and desires. Those three criteria may change often throughout the process. Needs weigh heavy on the three, but you don't want to sideline your wants and desires until you've had a good look at the market. You may find that your wants and desires fall into a class that exceeds your budget. At that point, you have a decision to make. Do you continue your search hoping for that needle in a haystack (and they do exist), or do you buy something that meets your needs, but isn't the dream house you envisioned?

My encouragement is to find a Realtor who will sit with you in his/her office and look at properties online until you narrow your search down to a manageable number. Once you've set that number, then you can hop in a car and take a look.

A lot of first-time home-buyers let their enthusiasm for the process take over their logical side. I urge my buyers to do drive-bys before we go out to look at homes. It is not unusual for a buyer to send me 20-30 houses they want to look at over a weekend. That's difficult in the best circumstances, and it's even more complicated when they are spread out over two or three communities miles apart. Narrow the search down in the Realtor's office so that you don't waste your time looking at homes that really aren't matches for you.

Buying a home: Step 3

The third step in buying a home is writing a contract. Once you've found a home that meets your criteria, it's time to write a contract. In this phase, you are going to set the limits for your purchase. You will state what price you are offering, how much money (if any) you are putting down as a down payment, the type of loan you will be using and when the appraisal is due to be done, the interest rate you'll be paying, if you will be requesting closing costs help, whether you'll be doing a home inspection, who will be closing the sale for you, and when the closing date will be.

There will be a lot of activity that takes place once the contract is ratified, but first, you've got to get the seller to agree to your offer. That may mean you and the seller may go back and forth in negotiations until you mutually agree to an acceptable deal for all. Once that's done, a new phase of the process takes over.

Buying a home: Step 4

Now, it really gets busy. I don't want to scare you, but getting a contract accepted is the easy part. Once you've accomplished that, a whole myriad of things take place. First up, there is a home inspection. A home inspection typically takes place in the first 10-14 days after ratification of you contract. You want to get that out-of-the-way upfront because it may show information that causes you to decide not to buy a particular property. 

A home inspection is designed to look at the home from a lot of different perspectives. The inspectors will look at the components and systems, including, but not limited to the plumbing, electrical, heating and cooling, roof, insulation, foundation, construction and appliances. Home inspectors are not code enforcement officers and they should not say things like, "This is a code violation," when they see things they think might be a modern-day code violation. What they should say is, "You may want to have a licensed professional check this to make sure it is safe."

The reason I state that, is because codes change. A home constructed in the 60s that passed all standard code compliance inspections in the 60s will not meet code compliance standards in the current day. That doesn't mean the house is unsafe, it just means that codes change and the house may not have been upgraded to meet more modern codes.

It is fine to ask a seller to bring certain things up to modern codes, but there is a limit to what most people will do. So, if the home seller comes back and say, "It met all applicable codes at the time of construction," he is likely correct. At that point, you can walk away, or you can accept whatever the seller is willing to do with your requests.

When you ask for home inspection repairs, always request that the seller used licensed professionals to get the repairs done. This is no time to have a sub-par handyman working on the home. Repairs need to be done by professionals.

Home inspections cost different amount based on the property, place, inspecting company and how soon the inspection needs to take place. The fee will be paid at the time of the inspection by you, the buyer. Once you get past the home inspection and the negotiations that follow, you're ready for step 5.

Buying a home: Step 5

Now, lenders and closing take the lead. Once the home inspection process is over, the lender and the closer to get involved again. The lender is going to start the loan approval process. That means you will need to verify what you originally told the lender by providing evidence of income, debts and credit-worthiness. 

A lender will look at your payment history, your income stream over time and the steadiness of your financial life. The lender wants to know that you can buy a home and that you can pay for a home faithfully. At this point, everything is about verification. Before any lender will loan you money, he wants to know you will pay it back. That's a simple process and conclusion.

Also at this time, the lender will call for an appraisal on the property you are buying. The appraisal is done to confirm that the property is valued at or above the loan you are applying for. The lender will loan money based on the lower of the offer price or the appraisal.

At the same time, the closing attorney or title company will be looking at the history of the home which is recorded in the courthouse. They will be looking for any issues that need to be addressed before closing. Most closers will check at least 60 years of the property's history. The goal is to make sure the title to the home can be transferred from the seller to you without any legal hurdles that might present legal liability later. A good closing attorney can save you a lot of headaches in the long run. You want what is called "clear title" before you sign any documents at the day of closing. A clear title means that there are no encumbrances (clouds on) to the title, and you can have that with a good closing attorney.

During this period, your Realtor may seem MIA, but the truth is, there is little for the Realtor to do during the lender underwriting and title search period. He/she will be making sure repairs are done on time, pest inspections and water tests (if necessary) are done, but there is limited need for the Realtor to be heavily involved at this phase.

Buying a Home: Step 6

If you survived the first 5 steps, you've made it. It's time to close. At closing, the work the closing attorney has done, and the reams of paper the lender has generated will all show up. You'll sign documents for about an hour and the home will be yours.

Just before the closing, a few things will happen. Shortly before closing, your lender will pull your credit one more time to make sure you're still a credit worthy buyer. You never want to take out a loan, buy anything on credit, skip revolving payments, quit your job or anything else that would negatively affect your credit during this whole process. Once the lender has verified that you are still credit-worthy, he will issue a "clear to close" to the closing attorney.

The funds to buy your home will be transferred, you'll sign for the loan and you will be given the keys. The entire process take 30-60 days depending on what loan you are using. Government backed loans tend to take a little longer to close, but they are not radically longer.

This is a simple look at buying a home. There are a lot more details in many of these steps, but you get the gist in these six steps. When you're ready to make that home purchase, be sure to call the Cornerstone Business Group, Inc. We are your local real estate sales pros, and we can help you navigate this process successfully.

 

*Some of these steps will vary state to state, but they will have some similarities. 

This post was originally posted at www.winchestervarealestate.com: Buying  home? What is the process? #mikecoopersellshomes, #cornerstonehomesales, #winchesterhomesales, #yourlocalrealestatesalespros.

 

 

 

 

 

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Show All Comments
Rainmaker
3,738,718
Sheila Anderson
Referral Group Incorporated - East Brunswick, NJ
The Real Estate Whisperer Who Listens 732-715-1133

Good morning Mike. This is excellent. It would be a terrific handout too. Hello Feature Fairy.....

Jul 23, 2017 06:26 AM #1
Rainmaker
3,871,897
Dorie Dillard CRS GRI ABR
Coldwell Banker United Realtors® ~ 512.750.6899 - Austin, TX
Serving Buyers & Sellers in NW Austin Real Estate

Good morning Mike,

Excellent post to help buyers learn the process of buying a home. I see a gold star coming on the horizon...just saying.

Jul 23, 2017 06:57 AM #2
Ambassador
4,103,862
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Hi Mike

Congrats on the feature - it's well deserved, as there is a wealth of information here for buyers, whether new or experienced. Buying a home is a huge job, even when it goes well. This could be a marvelous handout for buyers!

Jeff

Jul 23, 2017 02:25 PM #3
Ambassador
4,010,644
Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

Mike- it can be overwhelming for anyone, first time or not, to buy a home. You've laid out some excellent information that, yes, could be in any agent's handouts!

Jul 23, 2017 03:23 PM #4
Rainmaker
407,574
Susan Rupert
Kissinger Bigatel & Brower REALTORS - State College, PA
ABR, CRS, e-PRO, MCNE, SRES, REALTOR

Hi Mike-thanks for sharing your wonderful article on homebuying process. Great article.

Jul 23, 2017 08:44 PM #5
Rainmaker
2,630,784
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

Excellent tips to share with home buyers, Mike!  I'm glad this blog was featured. Well done!

Jul 24, 2017 01:37 AM #6
Rainmaker
2,630,784
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

CONGRATULATIONS Mike, on having this blog FEATURED in the Old Farts Club group!    

Jul 24, 2017 01:38 AM #7
Rainmaker
1,490,602
Kat Palmiotti
406-270-3667, kat@thehousekat.com, Broker, Blackstone Realty Group - brokered by eXp Realty - Kalispell, MT
The House Kat

Yes, these are all important steps in the house buying process. I'm sure a lot of buyers will find your post extremely useful!

Jul 24, 2017 04:06 AM #8
Rainer
65,072
Steve Bracero
Heisler and Mattson - Shrewsbury, MA
First Time Homebuyer and Investor Specialist

Hi Mike Cooper very good post for buyers! 

Jul 24, 2017 05:00 AM #9
Rainer
545,700
Sham Reddy CRS
H E R Realty, Dayton, OH - Dayton, OH
CRS

Great point in the buying process!!!

The funds to buy your home will be transferred, you'll sign for the loan and you will be given the keys. The entire process take 30-60 days depending on what loan you are using. Government backed loans tend to take a little longer to close, but they are not radically longer.

Jul 24, 2017 05:42 AM #10
Rainmaker
2,502,964
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Large purchases tend to awaken large flocks of inner butterflies. This post helps

Jul 24, 2017 05:58 AM #11
Rainer
261,429
Anthony Vosilla
Tony's Appraisal Services - Centereach, NY

Good, concise reporting of the process, nice job...

Jul 24, 2017 07:02 PM #12
Rainer
126,513
Stavrula "Sam" Crafa, RNC,GRI, CDPE, PSA
Future Home Realty - Seminole, FL
Providing the integrity and service you deserve.

This is a good explanation for buyers in your area. We have title companies that facilitate closings and not attorneys. So when I get a buyer from out of state and usually the north east, I have to explain that. Buyers can use an attorney if they want but it's not a common practice here in Florida. 

Jul 24, 2017 09:32 PM #13
Rainer
510,516
Dörte Engel
RE/MAX Leading Edge - Bowie, MD
ABC - Annapolis, Bowie, Crofton & rest of Maryland

Dear Mike,

Good explanation of the process. Of course, a million things can happen between step 1 & 6, but that is what we are there for, right?

Jul 24, 2017 09:37 PM #14
Rainmaker
401,523
John Wiley
Fort Myers, FL
Lee County, FL, ECO Broker, GRI, SRES,GREEN,PSA

So many buyers today do not know or understand the process and the importance of the areas you suggest.

Your steps are well laid out, and if the buyer will follow them they are on the road to success.

Thanks

Jul 25, 2017 02:59 PM #15
Rainmaker
267,497
Dan Derito
Success! Real Estate - Brockton, MA

Nice post Mike. It spells it out very clearly.

Jul 25, 2017 08:15 PM #16
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Mike Cooper, GRI

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