Home Buyers Guide
Buying a house can be one of the largest transactions you make in your lifetime. It is both an investment and home to live in. If done right, and with good fortune, it can be a rewarding opportunity. However, owning a home can be risky and full of costs, expenses, and peril. It is strongly recommended that you use the services of knowledgeable professionals to reduce your stress and exposure.
The first step in buying a home is to sit down with a pen and paper and make a list of your housing requirements, needs and goals. You should consider your lifestyle, neighboring schools (if you have children), recreational needs, and the features you are looking for in a community.
Do you want a large yard, a small yard, or no yard at all? The choice between a condominium, a detached home, or an attached home each have its benefits and issues depending upon your requirements. If you choose a home that is part of a homeowners association additional costs will be involved. The offset is that sometimes the homeowner fees pay for a gardener, water, security and property insurance. How many bedrooms and bathrooms do you need? Do you need a home office or extra garage space? The answers to these questions are combined to make up your housing needs and requirements.
Your budget for housing is the most important consideration. You should review the funds you have for a down payment, your monthly income and your current monthly expenses (food, life and health insurance, car payments, other loan payments, donations, etc.). When calculating your housing budget, include potential mortgage payment, property taxes, property insurance, maintenance and homeowner’s association fees (if they apply).
Being pre-approved for a real estate Loan has many benefits. A pre-approved buyer indicates to the Seller that the Buyer is serious and has the ability to complete a property purchase. It gives you the ability to quickly act upon a buying opportunity without having to get qualified by a bank. It also keeps you focused on properties that you can afford and not waste your time looking at unaffordable properties.
Picking the right realtor to work with who has the right set of credentials, skills and knowledge is very important. This professional can help you further your needs and goals. A realtor who can provide you with a good working relationship can really help when things get stressful and you can trust this person to look out for your interests.
After you have established a relationship with a realtor, the next step is to start viewing homes that are within your budget that meet your requirements, needs and goals. Keep a list of all homes that you view. Make notes of how each home compares with one another and how well they satisfy your housing needs and goals. Compare asking price, potential selling price, required down payment, property taxes, property insurance, maintenance, homeowner association fees (if applicable) and monthly payment. Rate each property based on its affordability.
When you find a home that best meets your needs you will begin the offer process. Typically the buyer makes an offer at a price the buyer is willing to pay. The offer includes a specific time period (deadline) that the seller must meet to keep the offer process going. The seller may counter offer your offer with a deadline by which you must respond.
This process of offer and counter offers goes on until a mutually agreeable price and terms are reached. At which point the final offer is accepted by the Buyer and Seller. There are conditions that must be met to complete the sale also known as contingencies. Included are requirements that an adequate loan must be obtained, physical property inspection performed, and a property appraisal inspection performed. Your lender will be working closely with you while your real estate agent walks you through the offer process.
The last step is closing the deal. A title search is done and a title insurance policy is issued to protect you against any claims against the property. Just prior to final settlement you will be given the opportunity of doing a final inspection. This will insure that the property is in the same condition when you signed the purchase agreement.
Settlement is typically on the closing date of the transaction. It takes place in the escrow office (if your state has escrows) or a lawyer’s office. The purpose is to verify and sign all of the paperwork required to complete the transaction. Settlement includes an accounting of the transaction costs and transfer of funds.
Finally, you receive the property title, an accounting of funds, transaction costs and copies of all documentation pertaining to the purchase. Congratulations, you also get the keys to your new home!