Many home-buyers get wrapped up in the overwhelming details of buying a home and get frustrated (understandably so; it's a big journey, and one of the largest financial ((and emotional!!)) investment that most make in their entire lifetime. That being said, below, you will find the clear, easy, precise way to home-ownership. Obviously, there are details along the way in which your lender, title company, and Realtor must coordinate, but it's best to leave those in the hands of the professionals in that particular field, while still knowing what's going on "with" your transaction.
1. Get pre-approved by a lender whom you trust and are comfortable with. "Can I skip to #2 before I find a lender?" No. A lender will tell you which plans are best for your financial goals, how much of a home you are approved for, as well as if there are any inaccuracies on your credit you should take care of prior to purchasing, that would prevent you from otherwise doing so. "I don't know any loan officers personally. How do I find one? Should I just google one?". No. Again, home is likely the largest investment you could possibly make in your life. Do you really want to "just google one"? Ask friends, family, and your Realtor (if you already have one) whom they recommend or whom they have had good experiences with. Make sure you feel comfortable with this person--you will have to communicate with them a LOT over the next several months during your home-buying journey. Make sure this is also a person who has your best interests at heart and will not only listen to your wants and needs but also search for what is important to you and not just "sell you a home". (Granted, you won't like "every" home your Realtor sends you...we don't expect you to!). Don't like a given home? Cross it off of your list, or save a home to your "favorites" list (this gives your Realtor a better idea of your decorative style).
**If inaccuracies or "credit delays" prevent you from owning now, ask your Realtor for a trusted Credit Repair Company. Many times, depending upon what is ON your credit, (coupled with a repayment plan and getting old inaccuracies off of your credit, you may be able to buy in 1-6 months. It does NOT have to be expensive OR painful. We've nearly all had situations in life (deaths, hospitalizations, major illnesses, surgeries, school debt, divorce, etc) that have affected us financially. If we know a lot about how to help you get on track...it's likely because we've been there ourselves and want to help. *Any Realtor should have strict client-confidentiality standards regarding keeping any of their personal information sacred.
2. Determine How Soon You Would Like to Move.
Only you know what is best for your move-time. If within 3 months or so, go to step # 3. Otherwise, there are multiple sites for you to browse online to determine what is available in the neighborhoods you are interested in (don't know which neighborhoods you are even interested in yet? Your Realtor can help you with this.
3. Find a Realtor: First and foremost, make sure this person has your best interests at heart and is willing to fight for you every step of the way.
Again, ask friends, family, co-workers who they have used. Most people are quick to pass on a referral who has done a good job for them and know they would take care of you as well. This person will listen to your needs and wants and will help create a plan to meet your goals. Then, you can search for homes!
4. Submitting an Offer
Once you have found the place you'd like to call "home", your Realtor will run comps to determine a fair offer. The general rule is to submit an offer which is fair (and not insulting) but that you will likely get a counter back on. Your Realtor will suggest the best negotiation tips. (Can't give away all of our secrets in an open forum ;-) From here, your Realtor will "write up a contract" filling in the blanks of the many items and blanks to negotiate within a contract. Send over that pre-approval letter to submit with your offer. Most listing agents will not even present offers to their sellers without one. No home-seller wants their time wasted by an unqualified buyer. They want to know that the offer they choose to work with is one that will make it to the finish line and not fall through mid-course. Contrary to popular belief, the sales price is not the only factor to negotiate in a Real Estate Sales Contract. Once all terms are agreed to, you will move on to step 5.
5. Executing a Contract
This simply means all parties have agreed to all of the negotiated terms. You will now write two checks--one for the option fee (made payable to the seller) ...generally $100.00 and one for the earnest money (made payable to the agreed-to title company), though both of these amounts are negotiable. Your Realtor will deliver (or email) the executed contract, and deliver earnest money to the title company. Sometimes a title representative will pick this up from you and deliver to the title company.
6. Get a Home Inspection
Remember your $100.00? This paid for an option period. This gives you an "out" if anything wacky comes back on your inspection that the owner does not want to repair or credit you for. This is your unrestricted right to terminate the contract (yes- for any reason). Your Realtor will help you negotiate these items via an "Amendment for Repairs". This must be done during the option period. In fact, you must pay close attention to all of the dates in the contract and in returning paperwork as everything will be time-sensitive.
7. Your Financing Contingency
If you are not among the lucrative few who are paying cash for your home, you probably signed a "Third Party Financing Addendum". Pay special attention to the verbiage in this addendum. As with all contracts, there are loopholes and caveats and are put in place to protect you...depending upon how you use them. This addendum covers you for a particular amount of time for particular terms. Your lender will be working very hard on "their" side of the transaction with your financing to meet this important deadline. Your lender will also then order a survey, and HOA documents will be requested.
REQUEST A BLANK TREC OR TAR SALES CONTRACT
8. Get a Home Warranty
Your title company will be contacting you to determine who you want for your Home Warranty Company. Your Realtor will recommend a few if you need help. The warranty is like an insurance policy in that it covers certain variables within your home. If something were to break down, and is in good working condition upon the purchase of your home, the home warranty should cover the repair via a service fee, in most cases. Your Realtor should have negotiated the seller paying for this for the first year ($500 or so). Like an insurance policy, you can get more or less coverage, depending upon what you want.
9. Your Title Policy
Your title policy ensures a free and clear title. With Encumbrances, or for instance...child-support liens or tax liens, a title cannot pass to you until the liens are paid (hopefully by the seller!). This step is especially important with foreclosures since most are sold "as-is".
10. Your Settlement Statement (formerly "The HUD")
This document goes over credits and expenses to both parties. The Escrow Agent will go over this very closely with you before you sign the rest of your paperwork. This is emailed a day or so before closing.
11. Closing Day
It's finally here...the anticipated day you have been waiting for--to finally hold the keys to your new home and walk through the doorway and know it's YOURS. The actual closing itself should take roughly 30 minutes. Make sure to bring your ID and have your certified funds (cashier's check or money order) ready. Your lender will have told you the amount you need to bring to closing. Time to celebrate the beginning of earning equity and many new memories in your new home!
As always, I am always here to answer any questions that you might have. This blog-post is intended to be a brief overview of the home-buying process. Contact me with any questions or to start your home search today!
By the way...I'm never too busy for your referrals! ;-)