Buying a house is one of the biggest investments you will make and so it is important to understand how to find and finance the perfect home for you. The home buying process can be stressful and would require a lot of your time to complete the purchase but these 10 steps can help make it manageable and help you make the best educated decisions possible.
When you decide that it is time to buy your own home, you must have cash for a down payment. You may choose to open a savings account or a family member may give the down payment as a monetary gift.
Depending on the type of loan and any loan programs you will qualify for, typically, you would need down payment that ranges from 3% - 20% of the purchase price.
Evaluate your finances. Your credit reports are an ongoing record of how you manage your finances. It plays an important role in the mortgage approval process and in determining the interest rate and other loan terms that a lender offers you
Before you start looking for a home, you need to find out how much you can afford. To determine this, you need to get pre-approved for a mortgage through a lender or a mortgage banker.
You will need to provide some financial information such as your income and the amount of savings, including your down payment and any investments you may have. Your lender will review these information and will be able to tell you how much they can lend you and the price range of the homes you should be looking at.
Real estate agents are essential partners when you are buying a home. They can provide you with home searches as well as valuable information on homes that are not easily accessible to the public.
Here are some of the exceptional values that real estate agents can provide you during your home search:
1. Knowledge of the home buying process
2. Negotiating skills
3. Familiarity with the area you want to live in
On top of that, using a real estate agent does not cost you anything as they are compensated from the commission paid by the seller.
Once you know how much you can afford to buy a house, it is time to look at the details of where to live. Often times, people choose a location based on factors such as family and work. Decide on a location and type of home you wish to buy. Then start touring homes in your price range - this is often one of the most enjoyable step in the home-buying process.
Your real estate agent can search for homes that best match your established criteria and can set up a date and time to visit potential homes. During this time you should not feel pressured or make hasty decisions. It might be helpful to take notes on all the homes you visit.
You will see a lot of houses! It can be hard to remember everything about them, so you might want to take pictures or video to help you remember each home.
Once you found the perfect home, it is time to make an offer on the property. This is an area in which your real estate agent is invaluable. Work with your real estate agent to negotiate a fair offer based on the value of comparable homes in the same neighborhood. Your real estate agent will draft a contract which will include the price of the offer, as well as the terms that will then be submitted to the seller. Once you and the seller have reached an agreement on a price, you can move forward to complete the home buying process.
Depending on the State where you are buying your home, your real estate agent may recommend using a real estate attorney who will ensure that the contract meets all of the necessary legal requirements.
Your real estate agent usually will help you locate a reputable inspector and arrange to have the inspection conducted within the allotted time period as specified in the contract.
Home inspections will give you a more in depth knowledge of the condition of the house. Home inspectors would check for signs of structural damage or things that may need fixing. Typically, to continue with the home purchase is contingent upon the results of the home inspection. It protects you by giving you a chance to negotiate for a credit or cancel the contract without penalty if the inspection reveals significant material defect and where the seller is not willing to remediate.
Both you and the seller will receive a report on the home inspector’s findings. You can then decide if you want to ask the seller to fix anything on the property before closing the sale.
Before the sale closes, you will have a walk-through of the house, which gives you the chance to confirm that any agreed-upon repairs have been made.
Lenders have a wide range of competitively priced loan programs and a reputation for exceptional customer service. Ask your real estate agent to introduce you to the preferred financing consultant.
You will have many questions about financing a home, and having an experienced, responsive lender to assist you can make the process less stressful.
Be prepared to provide financial statements and other documents that the lender would require from you.
As you can imagine, there is a lot of paperwork involved in buying a house. Your lender may require additional documents to be reviewed before they can approve your loan and issue clearance for closing the sale.
It is important to take note of the things that you cannot do when obtaining a mortgage loan as it might result to being denied of your mortgage application.
An appraisal is ordered by the lender during the mortgage loan process to assess the home’s market value and ensure that the amount of loan you are borrowing is appropriate. The appraiser is a member of a third party company and is not directly associated with the lender.
This is another contingency to the purchase of the property. It makes sure that you are paying a fair price for the home in the current market. If the appraised value is less than what you are buying the property for, you have the chance to renegotiate the purchase price or cancel the contract without penalty if the seller is not willing to lower the purchase price according to the appraised value.
Lenders require Home owners insurance for the property to be purchased before you will be cleared to close on the transaction . This will protect the home in the event of fire, theft, or other potential liabilities.
In case your property is located in a flood zone, you may be required to purchase a separate flood insurance. Find out if the property you are looking to buy is on flood zone.
Title insurance is another type of insurance that is considered and is handled by the Title company that is hired to do the title searches for the home you are buying. This will protect you against liens that is placed on the property and make sure that the title is clear and marketable. Title insurance should be equal to the home's full value.
At closing, the settlement agent or "closer" will go over the closing documents that you will need to sign to complete the purchase. This includes your loan documents, the closing costs and other fees that were paid. Once all paperwork are signed, your loan will be funded, the checks are dispersed, the ownership is now transferred to you and you will be given the keys to your new home!
Your home-buying process is complete!
WELCOME TO YOUR NEW HOME!
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Halo Realty is one of the fastest-growing real estate companies, family-owned, operated, and currently licensed serving the following states: New Jersey, New York, Connecticut, Pennsylvania, Florida, and California.