"I never learned how to buy a house, but thank God I know how many cells were in that leaf."- High School or College Students.
My first time buyer clients frequently inquire about the specific requirements to the home buying process. The process is outlined for you sequentially.
1. Apply for a loan/mortgage: Lenders will examine your financials and pre approve you for the maximum amount you could borrow. This is the first step in the process. Relax! The pre approval letter does not commit you to buying in anyway. It is simply a document that guides your borrowing power. A buyer needs to consider the complete financial commitment of owning a home including; taxes, utilities, maintenance,and living expenses. First time buyers don't forget your investment of a lawn mower, snow blower, decorating or updating expenses!
2. Determine your price range and specific needs, i.e., number of bedrooms and bathrooms, garage spaced, large yard etc, in your home and place them in writing. This is especially important if you are purchasing with a significant other as you'll need to be on the same page. Begin by listing 5 must haves and then negotiate to your top 3 absolutes. Next, share your list with me as this gives me the parameters to initiate your search. We'll refer to this list throughout the search as this will keep us focused.
3. Time to hit the road: Lets go house shopping! I'll never pressure you to spend more than what you have determined you are able to afford. Although it may be called "reality TV", real estate shows like HGTV don't often represent reality. Agents seem to procure homes at the very top or over the clients price range. It's important to be realistic. If your pre approval letter supports spending $190,000, stop looking at homes listed for $225,000, cause it ain't gonna happen
4. Write an offer: Our contingencies Earnest Money, Home Inspection, Appraisal, Financing/ Loan Commitment*
5. ACCEPTED Offer!:
Earnest money: This is "money paid to confirm a contract" This money gets deposited in the listing agents office trust account until closing, then goes towards closing costs. The typical earnest money is % of the home value.
Home inspection- We will have a deadline to complete the inspection and negotiate any defects with the Sellers. As written in the Offer to Purchase contract, "Defect means a condition that would have significant adverse effect on the value of the property; that would significantly impair the health or safety of future occupants of the property; or that if not repaired, removed or replaced would significantly shorten or adversely affect the expected normal life of the premises, or could result in a special assessment as a result of a condition of a “common element. "
Appraisal- This is managed by your loan officer and will determined the value of the property. If you're paying cash this isn't needed.
*Don't neglect your Homeowner Insurance. Your lender will escrow funds at closing for this.
Loan Commitment- A binding promise from your lender for your loan amount.
Almost to the finish line..!
Final walk through- Will be scheduled up to 3 days prior to closing. This will confirm the condition of the property, and determine if the defects that we negotiated with sellers were resolved.
Attend closing: Congrats you are now a HOMEOWNER!
Buying a home can be a confusing and stressful process. Allow me the privilege of working with you to reach your goal.
Thanks for reading! Until next time,