Purchasing Your New Home
Purchasing a home can be both an exciting and overwhelming experience. Buying a home means taking a look forward and determining what kind of home will best suit your family for the foreseeable future. From explaining the steps of buying a home, to looking at different types of loans you may be able to take advantage of, to making sure you understand all the lingo, I’m here to make sure your home buying process goes as smoothly as possible.
Real Estate Transaction Process
STEP 1: Figure out the money
First things first, order a free credit report online to make sure there is not something reporting on your credit that shouldn’t be. Potential lenders will be taking a close look at your credit history, and checking your report to make sure there are no errors can save you some trouble down the road.
Next, work on getting a pre-approval letter from a lender. A pre-approval letter states that you are approved to spend up to a certain amount on a home, signaling to sellers that your offer is good and is likely to go through. A pre-approval letter can be the determining factor between your offer and another buyer’s, so it’s important to get just right. A pre-approval letter doesn’t lock you in with a specific lender, so you are still welcome to shop rates once you have found your new home. Don’t worry about it dinging your credit, there is a 30 day window! (Check out my preferred vendor list below on this page, or on my resources tab!)
Before you start looking, determine what kind of budget you’re comfortable spending on a home. Just because you’re pre-approved for a larger amount doesn’t mean you should spend it all, and knowing what you’d like to spend a month on a mortgage ensures you are looking at homes that are comfortably in your price range. Ideally, you want to be able to pay off your home in 15 years or less so that you don’t pay a lot of extra interest, but your lender can extend out as far as 30 years. Ask your lender to show you all of your options and the bottom line paid on each to better understand what you can/are willing to pay for your dream home.
STEP 2: Determine your wants and needs
Before you start looking at houses, it’s a good idea to determine what the needs and wants in your home search are. Location, school district, size, and number of bedrooms/bathrooms can be some necessities you need to take into account, while an updated kitchen, swimming pool, or extra garage space may get added to your wish list. It is important to consider what things are the most important on the front end vs. things you could potentially add or change down the road. For example, you can’t change the location of your home and may not be able to extend your lot size, but you could renovate the kitchen later.
Figure out what things for you are non-negotiables, as well as things that are on your wish list, and don’t be shy about communicating those. If you know that there’s absolutely no way that anything less than three bedrooms is going to work for your family, or that the wooded lot behind a house is going to give you the creeps, communicate that. There’s no reason to waste time looking at houses that aren’t for you.
STEP 3: Find a Realtor®
Your Realtor® is going to be your lifeline while buying a home, and it’s important to make sure you find the right one. Interviewing and checking reviews online can help you find the right fit for you. This is one of the largest investments you will ever make, you need someone who you’ll get along with and feel comfortable confiding in to help you with the process. Your Realtor® is going to be searching for homes for you to choose from, helping you find lenders and contractor vendors, getting answers to questions, and supporting you through this entire process, so it’s important that you trust them.
Two terms that often get tossed around interchangeably are “Realtor®” and real estate agent. Although both a Realtor® and a real estate agent are qualified to help buy and sell property, a Realtor® is registered to the National Association of Realtors® and held to a higher ethical standard. Realtors® must abide by a stricter set of rules, meaning that they will go out of their way to protect your interests.
As your Realtor®, as well as your Buyers Representative, it is my goal to act on your behalf and work to obtain the home you desire with as little drama as possible. Real estate purchasing is not always a cut-and-dry process. I will be your negotiator, your advisor, and if we run into issues, I will direct you to those that can help complete the transaction. Finding a home is just step one, and I’m here to make sure the process kicks off smoothly.
STEP 4: Look at Homes
Once you’ve decided to work with me, it’s time for the fun part – looking at homes! Share with me what your most important needs and wants are, and if there are any specific homes you want to see, let’s do that first. Remember, go into house showings with an open mind – paint colors, light fixtures, and decorations can be changed. Things that are most critical are the things you can’t change – the school district, neighborhood, floor plan, bedroom, and lot sizes. Feel free to voice any concerns or questions; that is what I’m here for! I can also reach out to the seller’s agent to get more details on the home and answers to any questions about its history or functionality. Don’t be shy – this is your future home we’re talking about.
When you’re looking at homes, try to picture your family living in the space to determine if it’s the right fit for you. Consider the way you live (or want to live), and any future plans that might require extra bedrooms, the addition of a pool, and other wish list items that were discussed before you started your search.
STEP 5: Say Yes to the Address
After looking at a few (or a few dozen) homes, hopefully, you have found the one. Once you find the home, it’s time to put in an offer. I will assist you with what an appropriate offer may be based on recent sales in the area, although the decision is ultimately yours, you need to consider things like time on the market, competition for the home, and current market trends. Your offer will normally address the price you want to pay, a closing date, appliances you want to stay or removed from the home, as well as things such as a home warranty, contingencies such as loan approval, passing an inspection, and appraisal. The seller may accept your offer, reject your offer, or counter with another option. I will keep you informed of all negotiations and communication regarding the purchase of your home and will help you walk through this process. You and the seller will continue exchanging offers through your agents until you come to an agreement (or don’t and one party decides to walk away). If you are able to come to an agreement, it’s time to get excited – but only briefly, because now is when the paperwork begins!
STEP 6: Getting Down to Business
Once the offer is accepted, it’s time for us to get to work! First things first, you will need to quickly get earnest money check in to the brokerage to secure your deal. I will be able to offer more details about the earnest check when preparing your offer, but it is normally a percentage of the asking price that goes into escrow until closing.
You will want to get final rates from lenders and make a decision on who you want to go with, as you will need to start moving forward on the paperwork to be able to close in time. Your loan officer will be working very closely with you over the next few weeks to get all the documents submitted to underwriting, and I will be communicating with them to make sure we are all on schedule. Also, you will need to decide which insurance company you want to use for your new home and send that information over to your lender.
The biggest thing to remember during this time is to be responsive to phone calls, e-mails, and text messages. It is your duty to “act in good faith” throughout the process. Your lender and I will both do everything we can to help you but will need your cooperation in providing important information and documents in a timely manner. A lack of communication can ruin a good real estate deal and cause expensive delays.
You will also want to move forward with your home inspection once an offer is accepted. Home inspectors are typically booked several days ahead, and their report can take a day or two to complete after the inspection is done. You’ll want to make sure there are no major issues with the home before you pay any more expenses associated with the purchase. Also, getting the home inspection done early allows time for negotiations for any necessary repairs on the seller’s part, and prevents delays in closing. The home inspector you use is your choice and normally is paid for by the buyer (you), as well as any other inspections you request: termite, water tests, air quality tests, roof inspections, HVAC inspections, and radon to name a few. (For a list of great inspectors, check out my resources tab!)
Another thing you will need to complete prior to closing is a home appraisal, in which a licensed appraiser comes out to assess the value of your potential new home based on its condition, location, features, and a comparison with other homes that have recently sold in the area. The home appraisal is ordered by your lender and its purpose is to assure your lender that your home is a good investment and worth the amount of money they are loaning you.
As you approach the closing date, you will need to do a final walk-through on the home to take a last look at your new house before closing. The purpose is to make sure that any contractual obligations have been met, everything is in working order, and there’s nothing missing that should be there. If possible, it’s best to do the final walk-through after the sellers have moved out so that you can see the condition of the home without being hidden by furniture and decorations. Also, if possible, try to do the final walk-through a day or two prior to closing to make sure that the seller has time to address any problems that you may find.
I will provide you with a step-by-step timeline, walk through the steps with you, and help give you direction when you feel lost, so don’t feel overwhelmed, ask!
STEP 7: Time to Close
Once all of the contingencies have been fulfilled and the loan paperwork is complete, as long as everything on the seller’s side is good to go, it is time for closing! Closing is when the deed or title of the new home will be transferred to you, and you will officially take ownership of your new home. All the final details of the loan are wrapped up at closing, and any finances involved will be paid at this time. In our area, closing attorneys handle this process (again, see my resources tab)! It will feel like you are signing your life away, but once closing is over, it is officially time to celebrate!