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Find Your LenderPurchase » 9 Steps to home ownership
The first step or our 9 steps to buying a house is to locate a reputable real estate agent. Your agent will be your guide through the home buying process. A good agent will have an intimate understanding of the real estate market in your area, they will know where good values can be found, and should be readily available should you ever need advice during the house hunt.
You must have your financial house in order before you purchase a home. If you are considering buying a home, it is wise and often required to be pre-approved for your home purchase. In order to start the loan process, contact a mortgage broker when you have decided you would like to move forward with purchasing a home. The broker or loan officer will take a short application to be certain you can afford the house you are looking for. If you don't know your price range, they can also pre-approve you up to a certain loan amount. However, even though you might be pre-approved for a higher than expected loan amount, review your financial obligations and verify the mortgage payment is within your budget. The fear that many people have when pursuing financing for a home is whether or not they will get a fair mortgage. It does not need to be a stressful experience nor should you be afraid of obtaining financing. Use a BeatMyBroker.com approved mortgage broker to be certain you are getting the lowest interest rate and fees.
So you are pre-approved! Now that you know the price range you're comfortable with, it's time to find your home. Your agent will ask you several questions about what you're looking for in a new home. Do you need a two bedroom? Three bedroom? What area would you like to live in; How important is it that you have a large yard? These are all questions you your real estate agent is likely to ask. If they don't ask, tell them what you want. Your agent will do their best in finding you the house you've always wanted.
Here are some important things to consider when searching for a home.
Are you looking for a bargain house that needs work or something move-in ready?
Is the home in an established neighborhood in a good part of town?
If you have children, where are the best school districts?
Which areas have had the best appreciation or which areas have not depreciated?
Which areas have the best value?
Is your desired home located near highways, schools, shopping, etc.?
Identify the most important characteristics you are looking for in a home and let that guide you in the beginning stages of the home search.
Once you find your home, it's time to make an offer. Remember that the seller wants to get the most money they can for their home and obviously you want to get the best deal. Your agent will advise you of what a fair offer should be. They will look at comparable sales in the area to determine a starting price for your offer.
The final say in the offer price is entirely up to you. If you want to offer substantially less for a house than the asking price, you can do that. If the house seems to be a steal of a deal, you can offer more than the asking price to better your chances of purchasing it before someone else makes a stronger offer.
Once both parties have agreed on the purchase price and terms of the transaction, you will be under contract to buy the home. There are certain contingencies in place found in the real estate purchase contract that vary by state. Your agent will review these contingencies and deadlines in detail with you.
Get a home inspection! While a home inspection might be optional, it's always a good idea to have one done by a professional inspector. The home inspector will inspect the property for any deficiencies in construction and current state. They will look at the roof, foundation, electrical, plumbing, safety concerns, ventilation, appliances, and many other items.
If there is something wrong with the home you are going to be purchasing, you will want to know about it. If something is found to need repair, small or large, it can be addressed with your real estate agent and the seller before you move forward with the purchase. Your real estate agent should have referrals for expert home inspectors in your area.
Your mortgage lender will require an appraisal of the property as part of the loan approval. The appraisal will objectively measure the value of the home you are buying and can also determine any changes that may need to be made to the purchase price. If the appraisal comes in lower than the purchase price, the purchase price will almost always need to be lowered.
Since one of the qualifying criteria for a mortgage is Loan To Value (or LTV), lenders need to know the value of the home your are buying. A lender wants to be sure they are lending money against a property that has adequate value.
You should also be concerned with the appraised value of the property. You don't want to buy a home that is appraised under your purchase price and you would probably like to know if you are getting a great deal. Often, the appraisal will come in higher than the purchase price; this should make you feel great! You might be purchasing a home that already has some equity built in!
This is a boring subject but is actually very important. The lender will require that title insurance is purchased when taking out your mortgage. Title insurance protects the lender's interest in the property against title defects, liens, or other matters.
The title company will provide the title insurance cost and the lender's title insurance policy is typically the responsibility of the purchasing party. You can shop around looking for the best rate in title insurance policies, however they are usually very close in price. It is often best practice to use the title insurance company recommended by your mortgage broker or real estate agent. This will be the title company that has the best relationship with them and immensely helps with timely closings.
The lender will require you to have a hazard insurance policy insuring the home. The insured amount must be at least equal to the replacement cost of the property or the loan amount. The replacement cost of the property will be determined from the appraisal.
Insurance premiums vary greatly between companies. Check with at least two or three companies before setting up your insurance.
You've made it. You found your home, your loan has been approved, and all you need to do is sign the documents. Your loan signing will usually take place at the title company. You will be given a settlement statement prepared by the title company outlining the details of the transaction. Look over everything carefully and make sure it all looks correct. If you have questions, now is the time to ask.
A loan signing usually takes 30-45 minutes depending on questions and concerns. Once you have signed your documents, those documents are then sent back to your lender. The lender will then fund the loan as long as there are no other outstanding conditions need to be satisfied for the final loan approval.
The title company is responsible for making sure the seller is paid and the sale is recorded with your county. Once the funding of your mortgage loan and recording has taken place, you are now the owner of a new home!
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