Congratulations, you have decided to join the ranks of home owners – this is a great thing! There’s much to be done to help you along your journey, and this article will only paint your picture with a broad brush stroke. I recommend that you seek the guidance and council of professionals as you go, and be a smart consumer. Beware of well-intentioned advice from people you know that are not affiliated with the industry, their ideas could do more damage than good if you follow it.
Get your financial ducks in a row
Your first step is to determine how much home you can afford. The best option is to interview lenders, and start your pre-approval process. Your military experience will help qualify you for a VA loan, but depending upon your circumstances, there are other lending programs that might be more suitable for you. Ideally, you should have at least 5% of your purchase value saved up for a down payment. And of course, the more you have saved up, the more leverage you have as a buyer. Within a few business days of your loan application, you should receive a Good Faith Estimate, and a Truth-In-Lending disclosure. These documents will help clarify everything you need to know about your loan including loan amount, rate of interest, monthly payment, etc. You don’t have to spend every penny you are approved to borrow, so be wise and live within your means instead.
Hire a Realtor®
Now you can hire a great Realtor®. If you have no idea where to start, ask your lender for three references, and take the time to interview them all. You will likely be spending a lot of time with this person, so choose wisely between personality, skill and experience. Also, take some time to understand the difference between a broker and a Realtor®. Realtors are held to a higher standard by a Code of Ethics, learn more here: www.nar.realtor
Find your area to live based upon what is important to you. Should your search have a focus on being in a specific school district? Or do you want to make sure you are close enough to your place of employment? When finding your home, being practical is important, but it’s not everything. What are your hobbies and interests, and how could a home help accentuate them for you? You are about to own a piece of the American dream, you should have a picture in mind of what that dream means to you.
Make the offer
You’re excited because you have found “The One!” Have your Realtor® help you analyze the value and structure a purchase offer. Be prepared for bad news, it happens. There are other buyers eager to find a home just like you, and the home you just found may have already been found by someone else. Once you have secured your bid, make sure your lender is aware of your progress.
Time for some due diligence
Don’t assume that a new or ‘newer’ home is ok not to have inspected. Have the home inspected regardless of its age and apparent condition. Include a pest report in that inspection too. The inspector will not only help you identify problems, but can offer you tips on proper maintenance. Neighborhood reviews are just as important, look up city and county police reports for your given area to see what kind of activity is going on. Review your CC&R’s, and don’t be afraid to ask questions of the board members.
Negotiate your concessions or repairs
You are past the neighborhood review, and all looks to be well. Now it’s time to talk with the seller about what you found on the inspection report. Best advice, be reasonable. There’s a fine line between finding a win-win resolution between you and the seller, and asking for enough to take away the sellers incentive to sell. Compromise is tough, but necessary to move forward.
Make your lender happy, and they will return the favor
It’s mainly about communication and follow through. Check with your lender to make sure you have satisfied the paperwork challenge, and that all boxes have been checked. With a meeting of the minds between you and the seller, the appraisal should have been ordered at this point. Your lender will submit your packet to underwriting for review and approval.
Wait for Closing
Be prepared. Your closing date may change on you, and it may be very inconvenient. Your best bet is to communicate with your employer, friends and family about your anticipated closing date – subject to change if the stars don’t all align the way they should. While you’re waiting, look up your ‘Identification of Utilities’ form in your purchase agreement. Contact those utility firms as needed to set up your new accounts. Have a back-up plan for your lodging and storage of your personal belongings in the event you encounter a major set-back in your moving plans. Cooperate with escrow, make sure they can reach you during the day so you can sign your loan documents as soon as possible.
Time for keys!
Congratulations! You have survived the challenging prospect of getting a loan approval, securing a home in an active market, and are contributing immensely to your local economy as a property owner. You have taken part in the American dream, and your purchase is a fruitful contribution to the betterment of our society.
There’s much more to know about buying a home! For more than 17 years, I've been helping buyers like you find their dream home! If you plan on buying a home around Western Washington, please call, text, or email me with your questions at Ed@EdKunkelRealEstate.com or my cell at (360) 789-4708.