How To
Buy A Home
Step 1: Get pre-approved
Getting pre-approved is a very important first step in the home buying process. It evaluates your financial situation so mortgage lenders can establish a maximum dollar amount they are willing to lend you. Knowing this is vital because if you’re looking at homes prior to getting pre-approved you may be setting higher standards than you can realistically afford. Also, most agents will need a copy of your pre-approval letter to submit with an offer, and many of the top agents won’t even show homes to buyers without one.
Step 2: Connect with local REALTOR
Using a knowledgeable, local REALTOR to assist you in your home search is imperative to a successful, smooth transaction. Local agents know what counties or townships have special requirements for selling a home, certain municipalities require a well or septic inspection to be done before closing while others do not. REALTORS also represent their clients in the negotiation phase of buying a home, and coordinate with the listing agent and title company to help ensure that closing happens by the deadline established in the purchase agreement.
Step 3: Establish what you want compared to what you need
Having a realistic expectation for what you are looking for in a home is very important, especially if you are trying to purchase a home at the top end of your budget. If you have two children a three-bedroom home is probably a NEED compared to just WANTING a pole-barn for projects.
Step 4: View Homes until you find the one you can envision yourself living in
To experienced real estate agents its usually apparent when someone has found a home they would like to purchase. Buyers typically start talking about how they can arrange furniture, which bedroom each child could have, or start talking about the changes they’d like to make to the home when they find the home they would like to buy.
Step 5: Decide on an offer amount and other terms
Deciding to write an offer on a home is the easy part, aside from price there are many other terms dictiated in a purchase agreement. Things like inspection period length, how long is needed to close, earnest money deposit amount, among other terms are all a part of the purchase agreement. Once all terms are finalized then you can submit your offer.
Step 6: Perform wanted inspections
As soon as you find out your offer was accepted get the inspections scheduled as soon as possible. This way if you need additional, more specialized inspections you have a chance to get them done within the original inspection period. Almost all homes will have at least minor problems identified, the most important thing is to ensure that there aren’t any safety, structural, or mechanical problems that need to be delt with immediately.
Step 7: Negotiate if necessary
The home inspection often discloses facts that were unknown to both the seller and the buyer about the home. Buyers can ask for one of three solutions to patent defects;
- The first solution that can be sought is to have the seller fix the problem
- The second solution is to have the seller give the buyer an agreed amount of seller paid concessions (which reduce the amount of cash needed to close)
- The third solution is to have the seller agree to reduce the purchase price an agreed amount.
- The buyer can also accept the home in its current condition and sign an inspection release addendum and proceed with the purchase of the home.
While there is no limit to how much a buyer can ask a seller to do (or reduce the price) the seller is not obligated to do anything and is generally able to accept a backup offer or put the home back on the market if both parties cannot agree. According to how things are worded in to purchase agreement, the buyer may be required to rescind their offer before the inspection period expires (if both parties are not in agreement), otherwise they could be obligated to move forward with the purchase.
Step 8: Review title search and purposed deed
At some point after your offer to purchase is accepted, the buyer will receive the title work and purposed deed. It is important to ensure that all names are spelled correctly, that all of the standard and non-standard exceptions are noted and resolved if necessary. It is good advice to have a lawyer review the title documents to ensure that there are no surprises, but many people choose not to.
Step 9: Submit all necessary documents in order to get clear to close
Throughout the entire process you should be communicating with your lender and submitting documents as soon as possible when the lender requests them. Once the lender has all necessary documents, the appraisal is submitted (you’ve negotiated if necessary), and the home insurance policy is open then, you will receive a clear to close from the lender and you’re able to schedule closing!
Step 10: Final walk-through
The final walk-through is typically done within 48 hours of closing and is done to ensure that the home is in the same condition as it was when the buyer last seen it. There are many things that could happen to a home within even a few days of being left empty, so whether its holes in the drywall from the sellers moving large items or a bee infestation (true story), be sure to look closely before signing the final walk-through addendum.
Step 11: Closing!!!
Congratulations, you made it!!! Ensure you either wired the closing funds (and double-checked wiring instructions) or have the cashier’s check for the amount listed on the final settlement statement. You’ll also need your valid drivers license (or another form or state issued identification) and its always a good idea to bring your personal checkbook in case there are any last-minute changes in the cash to close amount. After signing your name more than you ever have, you’re a proud new homeowner!