I feel compelled to write this post, because most first time home buyers don't understand the process of buying a home, but they don't know that they don't know the process. They think they know, but they don't. So this post is a short little primer on what you should do when you decide to buy a home.
Get pre-approved for a loan. Getting pre-qualified was enough in days gone by, but not in today's market. This is the only way you will know what price range to begin looking in and the only way a seller can have confidence in your offer.
Make sure you have enough in savings to cover the down payment AND closing costs. If you're short of cash, ask your banker about financing the closing costs into the home loan.
This is the biggest mistake that I see first time home buyers and even homeowners who have not bought a house in several years make. They forget that they are going to need more than just the down payment to buy a house.
In Louisiana, the standard purchase contract contains language putting the burden of paying the closing costs squarely on the buyer. Of course, these costs can be negotiated, but rarely will a seller pay 100% of these costs. So, the buyer must be prepared to pay at least some portion of these costs.
Your banker should give you what is called a Good Faith Estimate of all the costs of buying a home which should include the itemized closing costs.
If you have to deduct the closing costs from the amount you had designated for a down payment, do that, then call your banker back and get them to adjust the prequalification amount taking the reduced down payment into account.
Look at houses in a price range based on your new loan amount + down payment.
Make an offer in writing on the house of your dreams. This is another common misunderstanding that homebuyers have. They think everything can be done with a phone call. They think that I am going to call up the home owner or the listing agent and make an offer for them.
Everything must be in writing. So when a buyer has decided on a house, there is a contract to fill out which contains all the details of the offer to purchase the house. This is then delivered to the listing agent who records when he/she received it. This protects the buyer to ensure that their offer was delivered to the seller in a timely manner.
Next, if you're counting on the seller to pay a good portion of the closing costs, and the deal hinges on this, be prepared to be disappointed. And don't blame your agent. Unless you're making an offer very close to the asking price, the seller will probably be disinclined to pay closing costs unless there are circumstances that make them desperate to sell.
Keeping these things in mind will go a long way to helping you get the home of your dreams!
GoodWin Team Realty
Good People Winning Together
Heather Goodwin, Broker