8 STEPS TO HOME OWNERSHIP
1. Decide to BuyAlthough there are many good reasons for you to buy a home, wealth building ranks among the top of the list. Home ownership is the best “accidental investment” most people ever make. But, when it is done right, home ownership becomes an “intentional investment” that lays the foundation for a life of financial security and personal choice. There are solid financial reasons to support your decision to buy a home, including equity buildup, value appreciation, and tax benefits.
Consider these facts:
- If you are paying rent, you very likely can afford to buy.
- There is never a wrong time to buy the right home.
- Down payments can be as low as about 3%.
2. Work with a RealtorDid you know that the typical real estate transaction involves at least two dozen individuals – loan officers, underwriters, appraisers, home inspectors, attorneys, insurance reps, title researchers, and a number of other individuals whose actions and decisions have to be carefully coordinated in order to get a home sale closed? Realtors expertly orchestrate all the professionals involved in your home purchase and act as your advocate.
If you work with me, I’ll:
- Educate you about the local market.
- Guide you to homes that fit your criteria.
- Promptly reply to your requests.
- Coordinate the work of other needed professionals.
- Negotiate on your behalf.
- Check and double-check paperwork and deadlines.
- Help solve any problems that may arise.
Working with a buyer’s agent adds value and, in most cases, does not add extra costs. Commissions are set by the seller and list agent before a house is a placed on the market and are paid from the proceeds of the sale. If there is no buyer’s agent, the list agent and listing broker keep the entire commission. However, if there is a buyer’s agent, the commission is shared between the two agents and their brokers. Since the overall amount of the commission is contractually agreed upon ahead of time and is paid from the seller’s profit, you won’t save money by not having a buyer’s agent. Since list agents work for the seller and their duty is to secure the best price and terms possible, why not protect your interests by working with an agent who will look out for you?
3. Apply for FinancingWhile you may find the thought of home ownership thrilling, the thought of taking on a mortgage may be downright chilling. Many first-time buyers start out confused about the process or nervous about making such a large financial commitment.
Yet with good guidance, the process is easy to understand one step at a time.
- Choose a loan officer or mortgage broker, or ask me for a proven recommendation.
- Start your loan application and get pre-qualified.
- Submit to the lender an accepted “contract to purchase.”
- Determine the kind of mortgage you prefer and finalize your loan application.
- Wait for the appraisal and title search, which your lender will order for you.
- Receive your funding at the closing table.
4. Find Your HomeYou may think that shopping for homes starts with jumping in the car and driving all over town. However, driving around is fun for only so long. If weeks go by without finding what you’re looking for, the fun can fade pretty fast. Take advantage of technology and start your search by looking online. Many listings offer virtual tours, and Googlemaps shows neighborhoods and street views. When you see a property that appeals to you, ask yourself whether it seems aligned with your values, wants, and needs.
Questions to ask yourself:
- What do I want my home to be close to?
- What features and amenities do I want? Which do I need?
- How much space do I need and why?
- Which is more critical: location or size?
- Would I prefer a fixer-upper or place that’s move-in ready?
- What neighborhood characteristics are important to me?
- What kind of road do I want to live on?
5. Make an OfferApproach the offer process with a cool head and a realistic perspective of your market. If other buyers are bidding too, I’ll provide you with helpful strategies to set you apart from the competition.
The three components of an offer are:
- Price – I’ll provide you with market data and comparable sales to guide your decision.
- Terms – The terms of the offer relate to financing arrangements and closing timeframes.
- Contingencies – Depending on the situation, the sale may be contingent on inspection findings, completion of repairs, sale of your current home, or something else.
6. Perform Due DiligenceUnlike most major purchases, once you buy a home, you can’t return it if something breaks or doesn’t work perfectly. That’s why home inspections and due diligence are so important. My goal is to help you learn exactly what you’re getting into, before you sign your closing papers. Don’t sweat the small stuff, but if a big problem turns up and the worst-case scenario appears to be true, you might want to walk away from the purchase.
To assist with due diligence, I’ll:
- accompany you to the home inspection
- review the assessor’s record and building inspector’s file
- check state databases for environmental hazards
- research flood insurance requirements
- point you to professionals with specific expertise
7. Secure the Mortgage CommitmentThe final stage of the home buying process is the lender’s confirmation of the home’s worth and your continued credit-worthiness. This entails an appraisal, title search, and a final check of your credit and assets. Your loan officer will keep you up-to-date on these matters and can call on me as a dependable resource if any unexpected obstacles arise.
Your responsibilities during this stage are to:
- Keep your finances as stable as possible.
- Return all phone calls and paperwork promptly.
- Communicate right away if there are changes to your employment, debt or credit.
- Obtain home insurance.
- Secure any certified checks or wire funds, if required.
8. Walk-through, Close and Follow-upWithin 48 hours of closing, we’ll walk-through the property once more to ensure it appears as you expected. If anything is amiss, let me know right away. Unfinished business can often be resolved when agents help assert their clients’ needs and expectations. Before the closing, be sure to bring your current driver’s license, any down payments that may still be due, and your personal checkbook in case small ancillary expenses arise. At the Closing, with the guidance of an attorney, you’ll sign documents that:
- Finalize your mortgage.
- Pay the seller.
- Pay your closing costs.
- Transfer the title from the seller to you.
- Make arrangements to legally record the transaction as a public record.
Closing is a momentous conclusion to your home-buying process and the commencement of your home-owning experience. Congratulations! But remember, let’s keep in touch! Even after you close on your house, I can still help you:
- Find answers to new questions about the property.
- Find contractors to help with home maintenance or remodeling.
- Help your friends find homes.
- Keep track of your home’s current market value.