Purchasing a home is one of the largest transactions that a typical person will ever do in their life. I have outlined a step by step process on how to purchase a home below. Keep in mind that all markets are different but most of the information below will work for any real estate market. In today’s media driven world where it appears that the real estate market is in a free fall and buyers have many questions I hope this information helps.
1. Find a Realtor - Do Your Homework
It is important to do your homework when choosing a real estate agent. Do not be afraid to meet with many different agents. After all, they are competing for your business and this is what makes the real estate industry successful.
Feel free to ask them the following questions:
- How many years of experience do you have in this industry?
- What services will you provide for me as my agent?
- What services does your company offer that others do not?
- How will you represent me as a buyer?
- Can you provide as much information as I need about homes in the area that fit into my price range?
- Can you provide all of the different scenarios with the sale of property I may purchase? (as far as additional fees, etc.)
- Explain the paperwork that I need to sign
- What is my contracted timeframe for using you as my agent?
Once you have chosen an agent, it is important to establish specific goals that you would like to meet. It is very important to communicate with your real estate agent and that, in turn, your real estate agent communicates with you. It is also beneficial for you to pick and stick with one Realtor.
2. Talk to your realtor about:
- The area you want to live in.
- The kind of home you are looking for. (You may want to make a list or brainstorm about the features and amenities that you find most appealing in a new home.)
- How much payment you can afford and are comfortable with, how much cash you have available for the initial investment in a home and how much money a lender will borrow you.
3. Get Pre-Approved with a Lender
Make an appointment with a lender to be pre-approved for a mortgage loan. This way you will know approximately how much you can afford and what price range you should be looking at.
4. Schedule Showings
Set a date to go look at homes that are on the market that most closely meet your needs and affordability.
5. Write an Offer
After you've found the right home, write an Offer to Purchase.
- Attached to offer is earnest money check (part of down payment). Check is cashed. Refunded only if home doesn't appraise or if your loan is denied.
6. Apply for a Mortgage
Once you've agreed to terms with the seller (offer presented by your Realtor), you apply for a mortgage.
The lender will be checking:
- Your employment and income.
- Your credit worthiness and history.
- Your savings and checking account balances to show you have the cash available to close the sale.
- That the home is worth the amount of money you want to borrow.
- How much monthly debt you carry and that your house payment doesn't exceed 29% of your total monthly income. And that your total monthly debt doesn't exceed 41% of your total monthly income (FHA loan). Conventional loans are 28% and 36%.
Your loan approval will take about 4-6 weeks. One week before closing you will buy one year's homeowners' insurance. At closing you will need the balance of the cash needed for closing.
7.Closing the Deal
Once a purchase agreement has been accepted your Realtor or attorney works to ensure a smooth closing for your transaction. Your Realtor or attorney will work with your lenders and title companies to close the transaction smoothly.
8.Consider your Insurance Needs
Insuring your home is like making an investment in your future. You work hard to have a home and homeowners insurance protects you and your family from someone or something from taking it all away.
There are many different forms of insurance:
- Title Insurance - which protects you in the event that the title on your property has a lien, unpaid taxes, or other legalities that would make it invalid.
- Homeowners' Insurance - which protects your home from fire, theft and other liable coverage.
- Flood Insurance - which protects your home from flood damage.
- Home Warranty - which offers buyers and sellers the piece of mind that should anything unexpected happen (due to normal, every day wear and tear) of the home's appliances, heating, air conditioning, plumbing, and electrical systems, it will be repaired (or replaced in some cases) for you without costly fees.
You have unpacked boxes, arranged your furniture and feel complete with your moving task. What's next? There is always an adjustment period when you move. It is important to understand that what you, your spouse and/or children may be feeling is completely normal.
Here is a list of a few things that may help: Start a list about what they like about:
Urge everyone to talk about how they are feeling.
It is important to get outside and tour the neighborhood or take a drive and visit some new places around the community.
E-mail old friends and neighbors to let them know about your new home and community.