Understanding the Home Buying Process
Here is a detailed overview of the basic 18 Steps of the Home Buying Process. This should give you an overall view of what you are getting yourself into.
|
|
Step 1: Research Your Preferred Location
Learn as much as you can about the average price of homes sold in the general area, and the demographics. Find out the property taxes, school districts, any planned developments, and health or environmental issues for that area.
Step 2: List your Wants & Needs
Make a list of the things most important to you such as proximity to schools and shopping, rural setting, tax rates, etc. Decide which items are "wants" and which are "needs".
Step 3: Narrow Your Desired Location to Between 3 - 6 Specific Areas
Try to narrow the specific area you would be happy to live in as much as possible. Have several alternatives in case you don't find what you're looking for in the preferred area.
Step 4: Make a List of the Type of House and Amenities You Absolutely Need and a separate list of the others things you want.
Make two lists the first one should be all of the needs that you have to have (such as number of bedrooms and bathrooms, size of lot), and the second of the things you want but can live with out. It is important to make clear distinctions between "needs" and "wants".
Step 5: Research Mortgage Rates & Get Pre-Approved for Your Mortgage
Getting Pre-Approved tells you exactly how much you can afford, what the closing costs will be, makes your offer look better than others, and gives you a chance to lock in a rate without being obligated to anything. In many "hot" markets, sellers and Seller's Agents may not let you tour a home until you are Pre-Approved!
|
|
Step 6: House Hunting - Browse Listings of Homes for
You can browse listings with your Agent or go online, or another great way is to drive around in the specific area you want, finding "For Sale" signs. Write down the address and give those address to your Agent.
Step 7: Make an Appointment with your agent to Tour the Homes You Like
If it is offered through an Agent they are obligated to show you the home while working in the Owners best interests. Your Buying Agent will know what to look for, which questions to ask, and how to spot troubled areas. Tour the home focusing on structure, not aesthetics. Paint and wallpaper can be changed. A weak foundation or leaky roof may be deal-breakers.
Step 8: Make a Realistic Offer on the Home You Want
Your Buyer's Agent will assemble a CMA to help you gage an appropriate offer price and help you to understand the contract terms and legal jargon. Too low of an offer may not be taken seriously and won't receive a counter-offer. And you do not want to pay for it more then it is worth. This is where your Agent will be of great help.
|
|
Step 9: Negotiate Your Offer
Your Buyer's Agent will present and negotiate your offer to the sellers and their Seller's Agent. This includes dickering, positioning, and even "selling" the terms of your offer to the sellers - all while working in your best interests. This is where they earn their value if they a good negotiators.
Step 10: Your Offer is Accepted
When the negotiating is done and everyone agrees, the final offer is accepted and signed by everyone. Once signed, it legally becomes the Purchase Contract.
|
|
Step 11: Formally Apply for Your Mortgage
The formal Mortgage Application Process will be simpler since you are already Pre-Approved. In this step is where your mortgage broker has you fill out the entire application and then sends it to underwriting to be approved.
Step 12: Have the House Appraised and Inspected
The appraisal and pest inspection are required by your mortgage bank. You'll want to get a structural inspection to protect yourself. If your new home has well and septic systems, you'll want those inspected too.
Step 13: Obtain a Homeowners Insurance Policy
You will need an annual policy which will be paid in full for the first year as part of your closing costs. Your mortgage bank will need a copy of the insurance commitment.
Step 14: Get Final Approval of Your Mortgage and receive the Commitment Letter
Waiting for the bank to finish underwriting your loan is usually the second longest step in the process. More often than not, the bank will need more information from you such as past bank statements or written explanations of anomalies. Get the bank whatever it needs as quickly as possible!
Step 15: The Title Company Give a Commitment for Title Insurance
This step of the process is done by the title company on your behalf. They do research on the property for any encumbrances or liens on the property to verify a clear title. Then at the time of closing, they issue you a title insurance policy that insures your ownership of the property subject to any easements etc. You will receive a commitment for the insurance policy early in the process so you know what items they will not insure over and if these are something you can live with.
Step 16: Schedule the Closing and Do the Final Walk-Through
The closing date is set per the contract and can only be changed by mutual agreement of all parties. The time of closing is the right of the seller, but generally we try to make it work for all parties. The final walk-through is usually done the day before or the day of closing and is conducted by your Buyer’s Agent and is for you to have a final look at the home to make sure everything is left the way you expect it to be.
|
|
Step 17: The Settlement
You, your Buyer's Agent, the sellers, the Seller's Agent, your mortgage loan officer, and the Title Company's closer all sit down at the table and sign off on tons of paperwork. You finally get the keys to your new home and walk away with enough fine print to keep you busy for a year. Be ready to sign your name at least two dozen times or more.
Step 18: Move In .
Yes, generally you can move in the same afternoon as the Closing. (it depends on what negotiated in your purchase offer) The house is yours to do with as you please. And no, your Buyer's Agent probably won't help you move furniture. Your home buying process is over.
