Step 1: Choosing a Realtor®
Choose a licensed Realtor® who can legally represent your needs as a buyer. When selecting a real estate agent from the pool of agents as a buyer it is best to choose an agent who is dedicated to buyers needs by exclusively representing real estate buyers only and ends with the satisfied feeling at closing that you were protected in all aspects of the transaction.
Step 2: Understanding your finances
Understanding your finances is the next step. It is time saving for buyer and real estate agent to have a clear price range to use when looking for a home. There is no sense looking at homes that you cannot afford and or spending more than you have to. Having a pre-approval letter will propel your home buying process into the next step. Note that it is best to select an agent who must keep all your information confidential and Realtors who are Exclusive Buyer’s Agents do this.
Step 3: What are your Needs? What are your Wants?
These two questions sometimes get their wires crossed once you begin looking at homes. It is best to start out with a checklist to refer to while looking at property. If you think about it ahead of time and write it down, you are more apt to find what you need quickly. However, deciding what is a need and what is a want, may be harder than you think.
Step 4: Search for your new home
Once you have decided on the basic needs and wants in your home selection, the fun part begins with search for properties that meet your criteria. To get started your Exclusive Buyer’s Agent will set up your search criteria and you will start to receive properties that match your criteria as soon as they come on the market. The agent will set up appointments to meet your scheduling needs and view properties with you.
Step 5: Getting the house you want…making an offer
After you select your future dream home, your Exclusive Buyer Agent will discuss pricing strategies, competitive market values, etc and then prepare all the pages in your offer. Your offer will be rather detailed and include many contingencies to protect all of your interests. Negotiating the offer once written is under your supervision, albeit, through your real estate agent. Remember having an exclusive buyer’s agent allows you worry-free negotiation with all your information held in the strictest confidence.
Step 6: What to do after your offer is accepted
Once an offer is signed by both parties, buyer and seller, you are under agreement and have a contract. Within your contract are certain contingencies that have been written in on your behalf. An Exclusive Buyer’s Agent will protect your financial deposit, by walking you through the contingencies of your agreement and keep you on schedule. This is a time where dates and information collected must be handled in an efficient manner to be kept within the outline of your agreement. As a buyer it is in your best interest to have the home inspected by a certified home inspector. Once that step is completed there may be other contingencies pertinent to the agreement. An appraisal will be ordered by the lender to evaluate what amount the bank will allow you, the buyer, to obtain for a loan. An appraisal amount should be the same or more than the amount you have agreed to pay in your contract, otherwise, more negotiations will need to take place. Financial commitment is when your mortgage company or bank has approved the appraisal and condition of your home and completed their review of your personal finances and approved your loan. Once this occurs you can secure a date and time for signing and arrange for movers. At this point the attorney or title company will do a title search of the property to assure that it is clear of any liens or clouds regarding true ownership of the entire parcel. They will also prepare the closing statement or balance sheet which clearly shows all monies in and out from buyer and seller and they will coordinate all documents for the closing. You will need to procure homeowner insurance at this time as well.
Step 7: What is a Closing?
Here you are ready to sign all the paperwork and make the house yours. All the steps have brought you to the point of having your belongings in boxes ready to move. Your Exclusive Buyer’s Agent has brought you through the buying process making it worry-free and easy to understand. Now you get to enjoy the thought that your dream is becoming a reality. The closing is the end of the buying process when you sign all the papers and make the house your home. Allow 1-2 hours for the closing.
Once the closing is complete – move in, unpack, sleep! Enjoy your home!
| |
WANTS |
NEEDS |
| AREA: |
city, country, golf course, 10+acres |
Near schools, work, friends, transportation |
| TYPE: |
pool, fireplace, walkout basement |
3 bedrooms, 1st floor master, 2 baths, garage, bigger |
| TIME: |
Yesterday, school year end, retirement |
after selling present home, before new job begins |
| MONEY: |
Low monthly payment, least amount out of pocket, low taxes |
Afford on one salary, repair money left over |
Sometimes your wants and needs will be the same; sometimes items on the wants list will become needs and vice versa. One person’s wants may be another person’s needs. Although it is important to establish guidelines and focus, it is also important to recognize that your wants and needs may change as you search. By sharing your thoughts with your agent, he or she can help you evaluate when you need to make a change and when you need to get back on track!
Financing
Types of Loans
There are thousands of loans available out there from a variety of lenders, but in general, the mortgage you choose will likely be determined by at least several key factors:
· How much down? Loans with 5 percent down or less are available but may require special qualifying.
· If you place less than 20 percent down, lenders will want the mortgage guaranteed by an outside third party such as the Veterans Administration (VA), the Federal Housing Administration (FHA) or a private mortgage insurer (PMI, or private mortgage insurance, is required by lender to protect against any mortgage defaults). More than 2.5 million VA, FHA and PMI loans are generated each year.
· How’s your credit? The best rates and terms are only available to those with solid credit. To get the best loans, make a point of paying credit cards, installment payments, rent and mortgage bills in full and on time (CREDIT SCORE).
· Are you a first-time buyer? It might seem that “first-time buyer” means someone who has never owned property before, but under most state programs, the term refers to those who have not owned property within the past three years. State-backed first-timer programs often feature smaller down payments and below-market interest rates.
How do you get a loan?
To obtain a loan you must complete a written loan application and provide supporting documentation. Specific documents include recent pay stubs, rental checks and tax returns for the past two or three years if you are self-employed. During the prequalification procedure, the loan officer will describe the type of paperwork required.
Likely the largest debt you’ll ever take on, a mortgage is a loan to finance the purchase of your home. Your home is collateral for the loan, which is also a legal contract you sign to promise that you’ll pay the debt, with interest and other costs, typically over 15 to 30 years. If you don’t pay the debt, the lender has the right to take back the property and sell it to cover the debt. To repay the debt, you make monthly installments or payments that typically include the principal, interest, taxes and insurance, together known as PITI. Principal Interest The principal is simply the sum of money you borrowed to buy your home. Before the principal is financed you can give the lender a sum of cash called a down payment to reduce the amount of money that will be financed. Interest Usually expressed as a percentage called the interest rate, interest is what the lender charges you to use the money you borrowed. As well as the given rate, the lender could also charge you points, and additional loan costs. Each point is one percent of the financed amount and is financed along with the principal. Principal and interest comprise the bulk of your monthly payments in a process called amortization, which reduces your debt over a fixed period of time. With amortization, your monthly payments are largely interest during the early years and principal later. In addition to your principal and interest, your mortgage payment could include money that’s deposited in an escrow or trust account to pay certain taxes and insurance. Generally, I your down payment is less than 20 percent, your lender considers your loan riskier than those with larger down payments. To offset that risk, the lender sets up the escrow account to collect those additional expenses, which are rolled into your monthly mortgage payment. Taxes The taxes are property taxes your community levies based on a percentage of the value of your home. The tax is generally used to help finance the cost of running your community, say to build schools, roads, infrastructure and other needs. You must pay property taxes even if you don’t need an escrow account and even after your mortgage is paid off. Insurance Lenders won’t let you close the deal on your home purchase if you don’t have home insurance, which covers your home and your personal property against losses from fire, theft, bad weather and other causes. Even if you pay cash for your home, you should buy home insurance unless you can afford to repair or rebuild your home if it’s damaged or destroyed.
David Weekley, author of “How to Buy a Home Without Getting Hammered”, offers these time-tested hints of the 10 biggest mistakes in home buying…
- NOT DOING YOUR HOMEWORK. Knowledge is power. Tremendous information is available on the Internet. There is no excuse for entering the market unprepared.
- TRYING TO MAKE A SHREWD INVESTMENT. People need to buy based on what fits their family. Don’t try to guess what will happen to the market.
- CHOOSING A POOR LOCATION. Even within a neighborhood, location matters. Is it on the busiest street? Is there a shopping center out the back window?
- OVERLOOKING AN INFERIOR FLOOR PLAN FOR AN ATTRACTIVE EXTERIOR. It may have gorgeous curb appeal, but you don’t live on the lawn. No matter how attractive the exterior, you need a livable home.
- OVERLOOKING HOW THE HOUSE WILL FUNCTION FOR YOUR FAMILY. How do you really live? Do you really need a formal dining room and living room? Would you be happier with an eat-in kitchen and a great room and a den to use as a home office? The house needs only to fit one family – yours.
- NOT HAVING THE HOME PROPERLY INSPECTED IN A RESALE. This is not the time for surprises. Get an inspection from a qualified, respected professional.
- NOT CHECKNG OUT THE BUILDER’S REPUTATION ON A NEW HOME. Talk to three or four people who live in the builder’s homes and see what they have to say. If one builder did all the houses in a neighborhood, talk to the residents and get their input. [It’s also a great way to see what your neighbors would be like]
- NOT GETTING WHAT YOU WANT BECAUSE YOU ARE IMPATIENT. This is a big decision. You need time. Impatient decisions can lead to mistakes.
- WAITING FOR A BETTER MARKET AND INTEREST RATES. Warren Buffett says the rear view mirror is always clearer than the windshield.
- NOT BUYING AT ALL. If you can afford a home and you don’t make that purchase, you’ll lose the benefit of tax deductions, building home equity and appreciation in value.