The Home Buying Process
Step 1: Get Pre-Approved for a Mortgage
Getting pre-approved for a mortgage is the first step. There is no point in even looking at homes unless you have been pre-approved for financing. You can go to your bank of choice and a mortgage loan officer will ask for information such as income, expenses, savings etc. In order to be eligible for a pre-approval you need to be employed at the same job for a minimum 2 years. While getting a pre-approval is not actually getting a mortgage, this important step shows that you will be able to pay for a home and what price you are approved up to. You are not obligated to get your mortgage from the lender that pre-qualifies you.
Renting is a great start before buying a home. It prepares you for handling mortgage payments and lender’s like to see that you have been paying rent on a timely basis. Furthermore, if you are and have been in good rental standing, I may provide a recommendation letter for your mortgage lender to assist in getting you financing.
Step 2: Find the Right Home
Think about your ideal home. Are you looking for a house or a condo? How many bedrooms would you like? Is it in a city or a suburb? Are there schools nearby? What are the property taxes? That’s where I come into play; it is my job to help you find a home where you and your family are most likely to thrive.
Step 3: Make an Offer
Once we find you the right home, let’s figure out how much you’re willing to pay for it. We take into consideration the condition of the home, the cost of any repairs, where it is located and how long it has been on the market. Once you have chosen said home, we work together to write up an offer. The seller can accept or reject our offer or make a counteroffer. Once an offer is accepted and the seller signs it, the offer becomes a legal contract that commits you to buy the home at a specific price within a specific time frame. Additionally, you will need to provide a deposit to the seller usually in the amount of $1,000.00 or more of your choosing. You will also need to choose an attorney to use for the purchase of your home. I can provide you contact information for quality reasonably priced attorneys I’ve worked with before. From there on, you have 90 days to get a mortgage, schedule a home inspection, negotiate a final contract and close on your new home!
Step 4: Apply for a Mortgage
There are many different types of mortgage options to choose from. Borrowers making a low-down payment may want to consider an FHA loan. Taking out a conventional loan with less than 20 percent down payment will require private mortgage insurance, which is simply insurance that only protects the lender. You may also receive a lower interest rate with a 20 percent down payment. Various types of loans may be more or less expensive than a conventional loan with private mortgage insurance, depending on your credit score, your down payment amount, the particular lender, and general market conditions. Your lender will also give you an estimate of your closing costs, which can range from 2 to 5 percent of the home’s sale price and can include application fees (not all lenders charge an application fee). You will also need to purchase homeowner’s insurance before closing.
Step 5: Home Inspection and Appraisal
A home inspection tells us if the home you are buying is in good shape or if it needs costly repairs. Depending on the results of the inspection, we can renegotiate your contract with the seller. Additionally, I can provide you a list of state-licensed home inspectors. We will both be present for the home inspection.
An appraisal assesses the value of a home based on the value of comparable homes in the neighborhood. Your lender will arrange for an appraisal to, essentially, find out whether the home you’re buying is worth the amount of money you’re borrowing.
Step 6: Closing
It’s been a long journey together but we made it! Once we have been given the clear to close from the lender, we will walk through the home with the seller 24 hours before the closing. Together we will carefully inspect the interior and exterior. Your attorney can help resolve any necessary repairs. It is important to note that you will not be able to dispute any damages or problems that are discovered after the closing.
Closings involve a stack of paperwork. I will be by your side to review all the mortgage and real estate documents before the closing date. At the closing you will need to bring two forms of identification and a certified cashier’s check to cover down payment and closing costs. You must also provide proof of homeowner’s insurance. Once all the paperwork is signed, the title of the home will be transferred to you. Your lender will give you a mortgage payment schedule with instructions. You will leave the closing with a folder full of paper and a set of house keys!