10 Steps To Buying A Home
1. Shop around for lenders who can provide quality loans with good terms. Take every aspect of the lender into consideration. Keep in mind things like the reputation of the lender, interest rates offered, length of the loan, the type of loan you want (fixed or adjustable), whether you’ll have to pay points, and whether pre-payment is an option. Look at loan fees and ask for terms of the loans offered by each lender in writing.
2. Get pre-approved for a loan, not just pre-qualified. Getting to the next step in the first home buying process with a pre-qualification is like bringing a knife to a gun fight. Pre-qualification is at most a verbal agreement that you generally appear to be a good candidate for a loan. Pre-approval requires a much more in-depth review of your finances, and results in a lender letter that shows the amount you can borrow. This letter is just about the only thing that will get the attention of a buyer’s real estate agent when you approach them.
3. Hire a buyer’s agent and put them to work for you. Remember, it’s free! You don’t pay a cent to the buyer’s agent because they are working off commission from the sales prices of the home you buy. So essentially, the person you buy your home from pays both their agent and yours!
4. Make a wishlist of your criteria for a home. Write down everything that comes to mind; your wants, needs, and “nice-to-haves” are all good starting points to work from. Think about the number of rooms you’d like, square footage, whether you want a yard – big, small, or none – and the location, neighborhood, and any nearby amenities or features that would make living there convenient and enjoyable for you.
5. Start searching for homes after you’ve gone over your big list with your agent and find out what kinds of property exists in your price range.
6. Make an offer on the house that’s right for you – something only you can really decide – and make sure that your contract and your offer are sound and that they resonate well in the current market. Your agent can provide recent sales data to help you in this endeavor, and will explain each page of the contract as you go over it together.
7. Negotiate a deal if your original contract is not accepted by the seller outright. Maybe you’ve been outbid by another potential buyer or the seller is not willing to concede to all of your demands. Be assertive, but be wise; you will most likely not be dealing with the seller directly in cases where both you and they have an agent, so make your agent fully aware of where you’re coming from at all times. Know when to stay and when to walk away; it’s okay to fold ‘em if things just aren’t going your way. This is not the only house out there!
8. Coordinate your tasks once you have an accepted offer and a ratified contract. There will be many things to take care of, including the home inspection, taking out a homeowners’ insurance policy, land surveying (if applicable), getting the home appraised, choosing a title company, and going over your costs with your loan officer. Some of these will be taken care of by your agent or your loan officer, and often they will each have resources in the requisite businesses to help you get things moving.
9. Deal with the results of the inspection and the appraisal as necessary. If problems turn up when the inspection takes place, you may be able to re-negotiate some of the contract terms with the seller. Likewise, if the home does not appraise for the full asking price, the seller may be willing to make concessions in order to get the home sold. Be aware that in most cases a lender will only provide as much money as the home is appraised to be worth, so in instances where the sales price is above the appraisal amount you may need to come up with the difference!
10. Know your costs before you get to the closing table. By the time the closing date arrives, you should have received a clear picture from your loan officer of your approximate costs, and a form called a HUD-1 that itemizes them and lists them out exactly so you know how much to bring to the table. Closing will consist of you and the seller each signing several forms; this time, the title attorney will review each form with you. Be ready to sign your name and initial dozens of sheets of paper. Then get the keys and start enjoying your new home!