Purchasing a home can be one of the most
rewarding experiences in your life. However, the process
is not without pitfalls and mistakes may cost you money
and valuable time. Following the 10 steps below will put
you on track to buying the home of your dreams and help
you avoid the aggravation associated with the home buying
pre-approved or pre-qualified for a loan
The first thing
you should do when shopping for a home is become
pre-qualified, or better yet, pre-approved, for
a loan. The process is typically free and involves
filling out a short application. To expedite
the process, many lenders allow this application
to be submitted over the phone or even on-line!
The lender will
use the information you submit to determine how
much you are able to borrow. This information
is very helpful because you will know what homes
you can afford and you won’t waste time
looking at homes you can’t afford.
In addition, the
lender will provide you with a pre-approval letter
upon acceptance of your application. This letter
will show the seller that you are able to purchase
their property and you are not simply wasting
their time. Many sellers will not enter negotiations
without a pre-approval letter, so be sure you
do not skip this step!
what you want and what you need
you begin searching for the home of your dreams,
take the time to sit down and decide what you
are looking for. Write down a list of things
that are important to you such as minimum number
of bedrooms and bathrooms, style, location, price,
features, etc. When you complete this list, sort
it into “need to haves” and “want
to haves.” This will help you focus on
what is important when viewing properties.
Your REALTOR® will
help you locate homes that fit your wants and
needs. Be sure to include your budget and location
concerns as well. Finding the ideal home is a
process of elimination. A REALTOR® is your
ally in making certain that you only view the
homes that meet your requirements and that you
don’t waste time with properties that are
not a match.
Start your search
on-line at your agent’s website or your
local MLS website. Browse through newspapers
or real estate magazines. Stay organized by listing
the homes that appeal to you. List their pros
and cons and see how they match up to the requirements
you wrote down in Step 2.
When you are ready
to view your prospects in person, ask your REALTOR® to
make appointments for you to visit those properties.
an Offer - Negotiating Terms
When you have decided on the home
of your dreams, your REALTOR® will help you
determine a fair offering price by preparing
a CMA (Comparative Market Analysis) comparing
similar sold properties and active properties
on the market. Your REALTOR® will make certain
that your offer isn’t too high or too low.
This will increase your chances of a successful
When your offer
is accepted, the final offer becomes an executed
contract and includes the buyer(s) and seller(s)
signatures. If you prefer you can have your attorney
review the contract prior to signature.
A “good faith” deposit
may be required to accompany the contract. This
deposit will be credited toward the purchase
price upon closing and is non-refundable unless
otherwise stated in the contract. Your REALTOR® will
advise you of the amount required and will help
you determine which contingencies should be included
in the contract to protect your best interests.
Your REALTOR® should
include a contingency that the property will
appraise to value in the contract. If you are
using a loan to purchase the property, your lender
will arrange for the appraisal.
In addition, your
contract should include a contingency for a Home
Inspection for which you should be present. A
standard Home Inspection will analyze the condition
of the heating system, central air conditioning
system, interior plumbing and electrical systems,
roof, attic, visible insulation, walls, ceilings,
floors, windows and doors, foundation, basement,
and other visible structures of the home as found
by a visual inspection. Ask your REALTOR® to
recommend a reliable Home Inspector.
acceptance of the contract, you should secure
a homeowners insurance policy form your insurance
company. Homeowners insurance covers your physical
property and possessions against theft and damage
from recognized risks and perils. These include
theft, fire and lightning, smoke, frozen pipes,
and ice and snow. Under some circumstances, you
may be required to purchase additional flood
insurance. You will be required to have Homeowners
Insurance in order to close on the property.
protect yourself from the debts or obligations
of the previous owner(s), you will be required
to purchase Title Insurance. Title Insurance
guarantees clear title of the property you are
purchasing and also provides protection against
financial loss in the event that the title is
in a condition other than how it was insured.
for your mortgage
the contract is complete and has been accepted,
it is time to formally apply for your loan. You
will be required to fill out an application and
provide pay stubs, bank statements, income tax
returns and any other documents requested by
the lender. To avoid negatively affecting your
credit rating, avoid making any large purchases
during this period.
final walk through of the home will permit you
to see any major damage that may have been hidden
before the home was emptied. This event is usually
scheduled on the day before the closing will
take place. If the previous owner(s) agreed to
leave anything behind as stated in the contract,
check that they did so. Verify that all appliances
are in the same condition as they were when the
property was viewed and inspected.
the closing, the final contract will be signed.
You (the Buyer), your REALTOR®, the Seller(s),
the seller’s agent, the attorneys representing
the buyers and/or sellers (if applicable), the
title company’s representative and the
lending company’s representative will attend
the closing. Make certain all parties signing
the contract have their driver’s license
or a photo ID at time of the closing. When all
the documents have been signed, you will receive
the keys to your new home and may move in immediately.
Congratulations! You have just made one of the
most rewarding purchases of your life!