The process of buying a home is complex and can be very stressful. Utilizing a Realtor (Buyer’s Agent) to represent you saves on the headaches and ensures that your interests are being protected. By law any buyer looking for a Realtor to represent them will have to sign a Buyer/ Brokerage agreement before any substantive discussions can be held.
One thing to note is that on the buying side the cost of the Realtor is free. The Realtor is compensated by the seller only when you close on a home.
I love the experience of helping people find their dream homes. From my experience working as a Buyer’s Agent I have created a Home Buyer Workbook which I provide to my clients. Below I have highlighted the five main questions asked about the home buying process and the steps to take for home buying success.
Before you start looking at homes for sale, you should get your financial house in order. First, request a copy of your credit reports. Sites such as Credit Karma provide all your reports for free. Comb through each report to ensure it’s accurate — and fix any errors you spot!
Next, compile all the documents you may need to provide to a loan officer, including pay stubs, bank statements, and previous years’ tax returns.
You can calculate how much you can afford by using a mortgage calculator.
Don’t forget to factor in money you’ll need for a down payment, closing costs, fees (such as fees for an attorney, appraisal, inspection, etc.) and the costs of remodeling or furniture.
Remember that you don’t always have to put down 20 percent as your parents once did. There are loans available with little to no down payment. An experienced home loan expert can help you understand all your loan options, closing costs and other fees.
Credit score and financial documents in hand, you’re ready to start researching options for your home loan.
Take advantage of online aids. You can comparison shop from a diverse group of reputable lenders in all 50 states, ranging from small, regional providers to larger, well known brands such as Citi and Bank of America.
You’ll get a personalized quote and can read lender reviews and ratings to help gain insights into which lender is right for you. Find out if you qualify for a special loan, such as a Veterans Affairs (VA) loan or any special home buying financing options through state or federal programs.
Make sure you get that mortgage pre-approval letter — it’ll make you a more competitive buyer.
Make a list of the things you’ll need to have in the house. Ask yourself how many bedrooms and bathrooms you’ll need and get an idea of how much space you desire. How big do you want the kitchen to be? Do you need lots of closets and cabinet space? Do you need a big yard for your kids and/or pets to play in?
Once you’ve made a list of your must-haves, don’t forget to think about the kind of neighborhood you want, types of schools in the area, the length of your commute to and from work, and the convenience of local shopping. Consider your safety concerns as well as how good the rate of home appreciation is in the area.
As part of the buying process, I ensure that a comprehensive buyer consultation is conducted. I meet with the buyer(s) and go through in detail all the wants and wishes of my clients. This helps to dial into specific properties and means that we do not waste time visiting homes which are outside of your required criteria.
I create a custom notification. Homes are emailed to you directly from the MLS as properties which meet your criteria become active.
Now that you’ve found the home you want; you will make an offer. Most sellers price their homes a bit high, expecting that there will be some haggling involved. I will provide you with a report of comparable homes in the area and what they have sold for. Once you’ve made your offer, don’t think it’s final. The seller may make a counter-offer to which you can also counter-offer. But you don’t want to go back and forth too much. Somewhere, you’ll have to meet in the middle.
Once you’ve agreed on a price, you’ll make an earnest money deposit (typically around 1% of the purchase price). This is money that goes in escrow to give the seller a sign of good faith. This money will be credited against your final closing costs.
Once your offer is accepted you will need to book an appointment for a home inspection. If you are purchasing a home with financing, pretty much every bank will require an inspection.
A comprehensive report of the home’s condition is created by the inspector and typically forwarded to you within 24 hours of the inspection. You will have the opportunity to go back at the seller and request any repairs or cash consideration.
During the closing period the lender will also request and set-up an appraisal. This is to ensure the amount being borrowed is less than the value of the property. The home inspection and appraisal are two items which need to be paid at the time and are not paid upon closing.
If the home falls out of escrow these charges are not refundable and will have to be paid again on the next property that you enter escrow on.
Make sure you talk to your mortgage banker to understand all the costs that will be involved with the closing so there are no surprises.
Closing costs will likely include (but are not limited to) your down payment, title fees, appraisal fees, attorney fees, inspection fees, and points you may have bought to buy down your interest rate.
Do you have any other questions about this article? Please respond below in the comments.