The 8 Step Journey to Buying a Home
1. Make The Decision To Purchase A Home
The reason purchasing a home can be such a wise move includes equity buildup, value appreciation, and great tax benefits.
Remember: make a decision based on facts, not fears.
– Do you pay rent? Then you can probably afford to purchase
– Regardless of market conditions, you can always find a good investment.
– Don’t have a large down payment? Don’t worry. You don’t need one to make your first home purchase
– Credit less than stellar? That’s alright. You can still find good financing to make your dreams come true
– Have a dream home in mind? Even if you can’t afford it, buying your first home today is the key step to be able to one day
– Feeling overwhelmed? Turn to an experienced professional who can explain the process and navigate the complexities for you
2. Find An Agent
Your agent is your guide through the often overwhelming and complex world of real estate purchasing. Many first time home buyers feel intimidated by the sheer number of professionals they have to deal with and the variety of factors that go into selecting the right home. A great agent not only walks you through each step in the process, but helps you make educated decisions about market value, location and more.
So what should you look for in a great agent? They should be very familiar with the local market, and help you understand the benefits to the different neighborhoods. They should be attentive and interested in placing your needs first, and once you’ve expressed your priorities they should be able to help you narrow down your search to the right home.
Further, they should have a team of experienced and trusted professionals with whom they work, from a property inspector to a mortgage broker, and introduce you so as to remove any chance of working with unprofessional people. They’re your primary advocate in any negotiation, and should always represent your best interests.
Finally, they’re there to double check deadlines and that all the correct paperwork has been completed, and to trouble shoot any problems that may arise.
3. Secure Financing
Committing to a home mortgage can be a daunting prospect. For most people it’s the biggest financial transaction they’ll ever make, and it’s essential to get right. Many first-time home buyers are unsure as to how to proceed, and can easily become overwhelmed by all the facets of securing financing.
To simplify the process, here are the six steps that everybody follows when securing financing for their first home
Six steps to Financing a Home
1. Select a loan officer (or mortgage specialist).
2. Submit a loan application and get preapproved.
3. Decide how much you wish to pay and pick a loan option.
4. Send your accepted purchase offer contract to your lender.
5. Get an appraisal and title commitment.
6. Receive your funding at closing.
4. Locate Your Home
Most people believe that finding a new home involves driving all over town, scrutinizing neighborhoods and trying to find the perfect property that appeals from the get-go. While that can be fun, it can also be incredibly time consuming and ultimately frustrating.
Instead, it helps to begin by asking yourself certain questions that will help you narrow down your options, and give you a sharp insight into what it is you really want. Here are some questions that will help you figure out your wants, values, and needs, both for the short and long term.
Key questions to ask yourself
1. How large do I want my home to be, and why?
2. Location: what do I need my home to be close to?
3. Could I tackle a fixer-upper?
4. Which is most important: size or location?
5. How much do I care about home value appreciation?
6. Single family home, or a condo?
7. What kind of neighborhood do I want?
8. Would I be interested in new home construction?
9. What features and amenities do I want? Which do I really need?
5. Making An Offer
Once you’ve found your ideal home, you need to put your dreams aside and become a cool headed business person. This is now the time to seriously evaluate your finances, the market conditions, the history of the property, and what kind of offer is in your best interests. There are three basic elements to an offer: price, terms, and contingencies.
You can determine the right price by evaluating the true market value of your home. This is where your agent’s local knowledge and research come in – allow him to guide you in this decision.
These are the other financial and timing factors that will be covered in your offer.
There are six categories that all terms fall under:
1. Schedule: this determines what happens, and when.
2. Conveyances: are any items staying in the house after the seller leaves?
3. Commission: this reflects the commission that both the agent who works with the seller and the agents who works with the buyer receive.
4. Closing costs: usually you will pay your own closing costs when you buy your home, but it’s possible to add your costs to your financing loan – you just need to write that into the contract
5. Home warranty: the seller usually pays this warranty which covers repairs or replacement of appliances and major systems.
6. Earnest money: sometimes a buyer will change their mind at the last moment and leave the seller high and dry. Earnest money protects the sellers from this possibility and shows how serious your offer is.
6. Perform Due Diligence
When you sign a contract and finalize your purchase, your home is permanently yours – and that means you can no longer complain about any problems you may discover. That’s why it’s crucial to do you due diligence and perform all property inspections and acquire the right kind of home owner’s property insurance.
A home owner’s insurance policy protects you in two ways:
1. Insures you against damage to your home
2. Prevents liability in case someone injures themselves on your property
Discovering all the potential problems with your new home before you sign is crucial to protecting yourself form a bad deal. That’s where a property inspection comes in:
• Detect if there is any hidden structural damage.
• Remember to not worry about little details – easily fixed items should be ignored.
• If you do find a big problem, you will need to bring in a specialist. Get their in depth evaluation, and if the problem is too large, you may have to walk away from the deal. If it’s not a deal breaker, you might be able to reduce the sales price to compensate for the needed work.
Almost there: the last step in the home buying process is receiving the financial lender’s confirmation of the home’s value and legal statue, and your continued credit-worthiness. This will involve the lender performing a title search, a final check of your financial soundness, and a survey of the property. Your agent will keep you in the loop as this progresses, but there’s very little you personally need to do.
Here are your few pre-closing responsibilities:
1. Keep your finances steady.
2. Maintain excellent communication and complete all paperwork immediately.
3. Talk to your agent at least once a week.
4. A few days before closing, check in with your agent to confirm that all your paperwork is in place and in order.
5. Obtain certified funds for closing.
6. Make sure to do a final walk-through.
On your actual closing day, you will be guided through the process by both the settlement agent and your own agent. You will sign the following documents:
1. Finalize your mortgage.
2. Pay the seller.
3. Pay closing costs.
4. Transfer the title from the seller to you.
5. Make arrangements to legally record the transaction as a public record.
Closing should be both a momentous conclusion to your home purchase process and a time to celebrate – and with the help of your agent, it will mark the beginning of your home-owning experience.
8. Protect Your Investment
After spending weeks if not months building a relationship of trust and respect with your agent, there’s no need to forget all about him once you close. In fact, your agent can be crucially important in helping you handle the hurdles that come with owning a home, and would love for you to keep in touch.
Even after you close on your house, you agent can still help you:
1. Find contractors to help with home maintenance or remodeling.
2. Handle your first tax return as a home owner.
3. Help your friends find homes.
4. Keep track of your home’s current market value.The long-term value of your home is dependent on your maintenance, which can help you’re your investment like nothing else.
There are two categories in home maintenance:
1. Keeping it clean: By performing routine maintenance on your home’s systems you can ensure their longevity and efficiency, depending on their age and style.
2. Keeping an eye on it: Watch for signs of leaks, damage, and wear. Fixing tiny problems early can save you a lot of money later.