Buying a home can be one of your most significant investments in life. Not only are you choosing your dwelling place, and the place in which you will bring up your family, you are most likely investing a large portion of your assets into this venture. The more prepared you are at the outset, the less overwhelming and chaotic the buying process will be. We hope this information is helpful, and if you have any questions about the process, we’re only a phone call or email away!
There are a few things it makes sense to do up front — perhaps before you even begin to look for a home. First, make sure you’ve given some thought to your reasons for buying a new home and perhaps even have a “wish list” to go over with your agent. Also, it will be helpful to have an idea of your budget.
Use the mortgage calculator on this site to get an idea of the monthly payment you’re comfortable with. Don’t forget that you may need additional cash for up-front expenses (such as appraisal and inspection fees or moving). If you aren’t sure of how much money you need for a down payment, consult with a home loan professional to understand your options and make a budget.
2) Find an Agent
Finding the right agent to work with is critical. You want someone knowledgeable, professional, and trustworthy; you need someone who understands you and what you’re looking for — and someone with whom you feel comfortable. Working with the right agent will help you at all phases of the home-buying process: from seeing good properties to negotiating the purchase price; from working through the “bumps” in the closing (which always occur!) to connecting you with a network of other respected professionals (title, inspection, legal, mortgage, and so on). At Fife & Associates we have decades of experience, and our work has earned us a stellar reputation. Take a look at our agents and read what our clients have to say about us. Call us today and see if we are right for you.
3) Establish Financing
If you haven’t spoken to a mortgage agent already, you may want go ahead and “prequalify” for a particular loan amount. This is usually a quick and painless process (sometimes it can be done online or over the phone). Once you’ve prequalified for a loan amount, you can get a letter from the loan officer stating your qualification to purchase a home up to a particular amount. This is helpful to focus your home search on your price range, and in the event you make an offer, this will demonstrate to the seller that you are qualified to purchase the home. The qualification letter could even make your offer stand out among others if you are competing to buy a home.
Note that as a buyer you might be advised not to make any major purchases (e.g. buy a car) before starting a home purchase, because such a big ticket purchase would change your debt-to-income ratio and might disqualify you for a home loan.
4) Search for a Home
This is the fun part! Armed with your list of requirements, you and your realtor can figure out what homes to take a look at. Be open to seeing a variety of homes early in the process, just to help you and your realtor zero in on the things that are most important and attractive to you. After you’ve been working together for a while, your agent will grow to know more specifically what you want, and be able to alert you when those properties become available.
5) Negotiate the Purchase
Once you find the home you want to buy, the next step is to write an offer – which can sometimes be less simple than it sounds. Your offer is the first step toward negotiating a sales contract with the seller. Since this is just the beginning of negotiations, it helps to put yourself in the seller’s shoes and imagine his/her reaction to everything you include. Again, this is where having a good agent will really pay off. Your agent can guide you towards an offer that is in your best interest while also being attractive to the seller. Your agent can give you information about current market conditions, how long the house has been for sale, what comparable properties are selling for, and how to position the offer to make the seller receptive to accepting it or entering into negotiations.
6) Due Diligence
Congratulations! When you get to the phase of due diligence (confirming that the house is what you think it is), you have found a house and have a contract in place with the seller. Before you move forward with the purchase there are a few checks you’ll want to do in parallel with your own preparations to move: getting a home inspection and appraisal.
The inspection will confirm the condition of the home’s major systems (like roof, plumbing, HVAC, electrical) and identify any potentially serious defects which can make your investment in your future a costly one. Home inspections usually do uncover a long list of to do’s, however they may not necessarily be reasons not to buy the home — just items to be aware of and resolve with the seller before you proceed.
The appraisal is required whenever you are financing the purchase of a home. It confirms that the home is worth what you have agreed to pay for it. Don’t be surprised if the home’s appraisal value comes in right around the price you have agreed to pay, this is not at all uncommon. For an appraisal, a licensed appraiser comes to the property and inspects it to determine fair market value. After the inspection, the appraiser researches similar homes in your area and compares recent sales to determine market value. Using the data gathered from the inspection and comparables research, your appraiser issues a final appraisal.
7) Close on the Purchase
By now you’ve probably noticed that when you buy a home there are all kinds of people and services involved behind the scenes to make it happen. When the time comes for you to “close” on (transfer title and purchase) your home, you’ll likely meet with your real estate agent at the title company to sign all the legal paperwork.
This is also when you’ll need to write checks to cover your down payment and closing costs. Make sure that you’ve gotten a written estimate of your closing costs before going to this meeting and that you’ve had a chance to look all the paperwork over thoroughly and ask questions ahead of time.
A transaction is considered closed once the deeds have been recorded. Then you own the home!
8) Move In
It is not always possible for you to occupy your new home immediately, and if this is the case you’ll know before you close on the home. The most common scenario is that the seller may be purchasing a home too, and in this case it is customary to allow the seller up to three days to turn over actual possession and keys to the home. Details about the timing of the transfer of possession should be clearly laid out in your contract to prevent confusion later.
9) Protect Your Investment
You’ve gotten your house, you’re all moved in… now what? Sit back and relax! From time to time you’ll need to take care of maintenance projects, and you may want to do some home improvement projects. Your real estate agent can help with this too. Contact him/her to get references for contractors; get information on the return you can expect to recoup on various home improvement projects (renovate your kitchen or bath?); or simply to ask how your home value has changed since you purchased it.