Steps in Buying a home

As mentioned above, you’ll want to make sure you have money for a down payment. However, you will also need to have money for closing costs, which are typically around 3 – 6% of the purchase price. Even if you don't have 3-6% saved, contact me as there are strategies and methods to reduce the amount you require. From gift letters, to seller paid closing costs.

Getting preapproved for a loan, is the first step in the mortgage process. If you’re approved, your lender will tell you how much money they could lend you to purchase a home. This estimate is based on a surface review of your credit, income and assets. However, just because you are approved, that doesn’t mean you have the loan just yet.

You’ll want to get preapproved for a loan before you begin looking for homes for a couple of reasons:

It helps you determine how much home you can afford, which will narrow down your search.

It tells sellers that you’re a serious buyer and you’ll have an easier time securing funding for your home purchase.

Remember there is a difference between prequalification and preapproval. Prequalification carries less weight than a preapproval does. This is because the lender doesn’t verify all of your information to prequalify you. However, during preapproval, the lender will check your credit and verify your income and assets.

If you are borrowing funds for the home, do not borrow money or make big purchases until after you close on the home. Any new debts can send up warning flags or disqualify you from the loan. If you have any questions, contact your mortgage provider.

  Before you start searching for new homes you need to be realistic with how much house you can really afford. Keep in mind that, while your lender may have approved you for a certain amount, that doesn’t mean you’ll be able to afford the monthly payment. The approved amount is for the home itself; it may not include the other fees tacked onto the monthly payment, including interest, private mortgage insurance (PMI) and escrow.

Below are some common terms you will hear regarding mortgages:

Interest – This is what the lender charges you for borrowing money. There are several factors that determine the interest rate on your mortgage. These include your credit score, the type of loan you get, your lender and your loan term.

PMI – If you don’t put at least 20% down on the home, you’ll need to pay PMI. This helps protect the lender in case you default on your loan. It does not protect you.

Escrow – If your lender requires you to have an escrow account, they will charge you a certain amount of money that they will keep in the account and use to pay your property taxes and insurance each year.

When determining how much house you can afford, don’t just look at the monthly mortgage payment. Think about your other monthly living expenses including groceries, gas, utilities, entertainment and other debts. You’ll also want to factor in the costs that come with homeownership. These may include maintenance and repair costs, landscaping expenses, HOA fees, furniture, and more. 

You know your lifestyle and finances best, so it’ll be up to you to figure out what you can reasonably afford. It could also be helpful to speak to a financial advisor. 

Most people when they start looking for a home already have envisioned what they want. As an agent, I will help you work through what you want vs need and keep the big picture in focus, given the specifics of your situation. 

I will help you create a list of must-haves (your needs), your nice-to-haves (wants) and your absolutely-nots (deal breakers), and keep you thinking about your future. 

For example, if you plan on living in the home for a few years, what will happen in that time? Will your family grow? Will you take on a new job or hobby? Will you be getting roommates? Etc.

While this is often the most fun and exciting part of buying a home, it can also be the most frustrating. 

I will work with your the requirements to  provide a list of homes that meet them. I will then tour homes with you, and provide in-depth research on any homes that you might be interested in.

I am someone who believes the right home will come around at the right time. Be patient. The best thing about being prepared, by having done your research, is that when the right house does come along, you will be able to make informed decisions very fast.

Once you have found a home that you want to purchase the next step is making an offer.

When writing up an offer, I will write it to best represent and protect your interest.

Once an offer is made, the seller has three options:

They can accept the offer exactly as written and continue on with the sale of the home.

They can reject the offer.

They can propose a counteroffer.

If the seller proposes a counter offer, I will  work with you to negotiate a fair price with fair conditions with the seller.

If we are unable to reach an agreement with the seller, you may have to walk away from the home. 

However once an offer is accepted, you’ll need to make an earnest money deposit. This earnest money deposit, if you end up completing the purchase of the home, will be applied to your down payment or closing costs. 

If you end up backing out of the deal for an acceptable reason – like a failed home inspection or low appraisal – you’ll get that money back. 

However, if you back out of the deal for something like a simple change of heart, you will not get the money back. 

Real estate disclosures will reveal any issue with the home that can have a negative impact on its value or how you’ll experience living in it. Real estate disclosures will better help the buyer make an informed decision on whether to buy it. Disclosures can also protect the seller from being held liable for any issue the buyer encounters after purchasing the home. My big advice is, if you are a Seller, disclose everything truthfully. If you are a Buyer, verify everything.

While it isn’t required to buy a home, you’ll also want to get an inspection on the home. This is something you’ll have to pay for, but it’ll benefit you greatly to have one done. An inspection will help uncover any issues with the home that the seller may have tried to cover up or didn’t even know about. 

It’ll allow you to get a better idea of the internal operations of the home and get into the nooks and crannies you won’t typically get to see during an open house. The inspector should test the electrical work and plumbing and examine important parts of the home, including the roof, basement, attic and foundation.

To get the most out of your inspection, I recommend that you walk through the home with the inspector so they can point out and explain any issues they see. This is your opportunity to have some of those inner workings explained to you and to be aware of any problems or potential issues that could arise in the future. 

If the inspector does list any red flags or repairs that are needed on the home, I will discuss them with you to decide if we should try to have the seller them fixed before the sale, try to negotiate a lower sale price or if you should consider backing out of the deal.

If you’re getting a mortgage, you will also be required to get an appraisal on the home. This is different and separate from a home inspection. The appraiser does not inspect the home for defects. Their job is to make sure the home is valued at a minim the price offered because the lender cannot lend more than the appraised value of the home. It will also keep you from paying more on the home than what it is worth. 

If the appraisal comes back lower than what you offered on the home, you have a few options that I will go over with you.

• You can renegotiate the price with the seller. Chances are, they will have a hard time selling above the appraised value to anyone else anyway.
• You can pay the difference with a larger down payment and borrow less money.
• You can request another appraisal, which you or the seller will need to pay for.
• You can walk away from the deal and start looking for another house. 

Before closing your loan, you’ll be required to get homeowner’s insurance. Just like a mortgage, you’ll want to shop around for your homeowner’s insurance as different agencies offer different rates. Make sure you fully understand what is covered and how much your deductible will be if you need to file a claim. Often times, cheaper insurance means less coverage and higher deductibles. You’ll also want to consider where you live in terms of what you need covered.

I will arrange for you to attend a final walk-through of the home to make sure the property is in the condition that was stated in your purchase agreement. Make sure all repairs were completed, the property was not damaged and the appliances that were sold with the home are still there and in working order.

Read and acknowledge your Closing Disclosure provided by the bank and escrow. It provides a summary of the final costs of your loan. You must acknowledge that you received this document to move forward with your closing.

On closing, You’ll sign the final paperwork for the mortgage and allowing the title to be transferred to your name.

Sounds simple. At times it is, often it isn’t. I will help you work with all these details and work through all the bumps and issues as they come up. 

What To Expect At Closing

Closing on your home is the last part of the home buying process and one of the most exciting steps you’ll take as a home buyer. 

On the day of your closing, make sure that anyone who is on the loan is present. You can also expect either someone from the title company or a notary sent by the closing company to be there.

Make sure you bring the following items to your closing:

Photo identification in the form of a driver’s license, passport or government-issued ID

A cashier’s check to cover the final closing costs, or you will have to send a wire transfer as explained in your Closing Disclosure. 

#########BEWARE OF WIRE FRAUD####### IT CAN HAPPEN TO YOU######

WHEN I WRITE UP AN OFFER, I WILL ASK YOU TO SIGN A "WIRE WARNING DISCLOSURE" IDENTIFYING THE RISKS OF WIRE TRANSFERS. ALWAYS READ AND UNDERSTAND THIS DISCLOSURE. IF USING WIRE TRANSFER, CONFIRM – DOUBLE CHECK – AND CONFIRM AGAIN THAT THE INSTRUCTIONS ARE FROM ESCROW. PEOPLE HAVE LOST FORTUNES TO WIRE FRAUD.

Once all of the paperwork is signed and the bank has funded the loan, we will wait until escrow receives the recording numbers from the state. The recording number is the confirmation that the title is officially transferred to over to your name.

Once we have recording numbers, you’ll get the keys to your brand-new home.