6 Steps to Buying Your Home
Nervous or unsure of what to expect when purchasing a home? Read the following six steps to buying a home.
1. Making the Decision to Buy
Purchasing a home can be one of the best, yet largest, financial investments that you will make in your lifetime. It’s important to make decisions based on facts vs. fears. Here are some things to consider as you make the decision:
Renting vs. Buying – If you can afford to rent, you likely can afford to buy. If you have the financial ability to hold onto a property for the long run, buying can be a great option.
Financial Benefits – There can be great benefits to owning a home including, but not limited to, equity buildup, value appreciation, and tax benefits.
Down Payment – Did you know that you don’t necessarily have to have a substantial down payment to purchase a home? For qualified purchases, your down payment could be as low as 3.5% of the purchase price. A mortgage loan originator is a great resource to understand what you qualify for and what will work best with your budget.
Credit Score – If you have a less-than-perfect credit score, that won’t necessarily prevent you from qualifying for a mortgage loan. Speak with your mortgage loan originator for details on your specific circumstances.
It Doesn’t Have to be Complicated –Take the guess work out of home buying by surrounding yourself with a team of professionals.
2. Hire Your Real Estate Agent
Did you know that a typical real estate transaction includes upwards of two dozen individuals? From mortgage brokers, appraisers, escrow officers, the buyer’s agent, the seller’s agent, and many people in-between, buying a home requires all individuals involved to be well orchestrated in order to get a home purchase to closing. The real estate agent is in charge of this orchestration and it is their responsibility to coordinate and advocate in your best interest.
Your real estate agent is responsible for:
Educating you about the market
Listening to your wants and needs
Guiding you to homes that fit your wants and needs
Coordinates the work of other professionals required
Negotiates on your behalf
Checks and double-checks paperwork and deadlines
Solves problems if they arise
3. Financing Your Home
For many people, especially first-time homebuyers, securing financing can be the scariest part of purchasing a home. To simplify the process, below is an easy-to-understand checklist of the process to financing your home:
Choose a mortgage loan originator
Apply for a loan and get preapproved
Determine what you want to pay and select a loan option
Submit to the lender an accepted purchase offer contract
Get an appraisal and title commitment
Obtain funding at closing
4. Find Your Home!
Probably the most exciting part of purchasing a home is driving by, looking at, and envisioning your life in your new home. It’s important to assess what you want, need, and can afford – both for the short- and long-term.
Things to consider:
What do I want my home to be close to?
How much space do I need? And why?
Which is more critical: location or size?
Would I be interested in a fixer-upper?
How important is home value appreciation?
Is neighborhood stability a priority?
Would I be interested in a condo?
Would I be interested in new construction?
What features and amenities do I want? Which do I really need?
5. Make an Offer
Moving from hunting to offering is a big paradigm shift: you have moved from dreaming to business. It’s imperative that you approach this process with a level head and a realistic perspective of the market where you are purchasing.
An offer must fairly reflect the true market value of the home you want to buy. Your agent’s market research will guide this decision.
Be aware of the following terms of a real estate offer:
Schedule – A schedule of events that must happen before closing.
Conveyances – Items that stay with a house when the sellers leave (e.g. refrigerator, washing machine, etc.).
Commission – The fee for both the agent who works with the seller, and the agents who work with the buyer.
Closing Costs – The costs associated with legally closing the real estate transaction. It’s standard for the buyers to pay the closing costs, but if you want to roll the costs into the loan, you need to write that into the contract.
Home Warranty – This covers repairs or replacements of appliances and major systems. You may ask the seller to pay for this.
Earnest Money – This protects the sellers from the possibility of your unexpectedly puling off the deal and makes a statement about the seriousness of your offer.
6. Close
Finalizing the purchase requires the lender confirming the home’s value and legal statue, as well as your continued creditworthiness. This includes a survey, appraisal, title search, and a final check your credit and finances. Your agent will keep you informed of how this process is progressing. At this point, your work is pretty much done.
Your final pre-closing responsibilities include:
Stay in control of your finances
Return all phone calls and paperwork promptly
Communicate with your agent at least once per week
Several days before closing, confirm with your agent that all of your documentation is in place and in order
Obtain certified funds for closing
Conduct a final walkthrough of the property
On closing day, with the guidance of a settlement agent and your agent, you will sign documents that will:
Finalize your mortgage
Pay the seller
Pay your closing costs
Transfer the title from the seller to you
Make arrangements to legally record the transaction as a public record
If you follow all instruction, closing on your home should be a momentous conclusion to your home search and the start of an exciting home-owning experience!
Need help? We’d love to talk to you. Connect with Atherton Real Estate Group today!