Congratulations on your decision to purchase a new home! Your first step toward buying your new home will be to analyze your needs. Your real estate agent can help you determine exactly what you want your new home to look like and how it should function for you and your family.
First, write down why you are looking for a new home. For example, are you currently renting and would like to begin building equity? Maybe you recently married and have outgrown your current residence. Or, maybe you received promotion that requires you to move to a new city. These factors will all have a bearing on how you approach your home search.
Second, establish a time frame for buying your home. Depending on your reasons for wanting a new property and the current state of the market in the area you are looking to buy, you should be able to come up with a rough guideline.
Finally, you probably have a mental picture of what your dream house looks like. Turn these ideas into two lists: one should describe your dream home and the other should list features that are absolute must haves. In a perfect world, your new home would fulfill both lists 100 percent, but it is more likely the two lists will turn into a list of priorities, as you get clearer about what you want and what is available.
STEP 2 - PRE-APPROVAL VS.
PRE-QUALIFICATION
Now that you know what you want in a home, you need to find out what
you can afford. There are two ways to go about this:
prequalification or pre-approval for a loan. Either way, you can
contact your agent about choosing a mortgage company.
Prequalification is the simpler of the two processes. It can even be
done online or over the phone. When you contact a mortgage company,
they will ask you for some basic information about your finances ?
how much money you earn, your debt load, etc. They will take this
information and give you a rough estimate of how much of a loan you
might qualify for.
Pre-approval is more a more in-depth process. The lender will
perform an extensive check of your finances including your credit
rating, whether or not you're a first-time buyer, what your debt
load is, how much money you have to put as a down payment, etc. This
figure will be a much more reliable estimate of what you can afford.
In most markets, pre-approved buyers are preferred over those that
are merely pre-qualified. Being pre-approved lets the seller know
you have gone through an extensive financial background check and
there should be no unexpected obstacles to you buying their home.
STEP 3 - NEIGHBORHOOD
INFORMATION
Now that you have your list of needs and wants and know how much you
can afford to spend, it's time to look at some houses, right?! Well,
don't forget, people don't just buy a house; they buy the
neighborhood the house is in. Think about that...if you found the
perfect house but it was in a neighborhood that was not to your
liking, would you make an offer on it?
You will need to make another list for the type of area you want to
invest in. Consider things like drive time to work and major
destinations, amenities such as swimming pools, tennis courts,
parking, etc., area schools and the demographics of the surrounding
area.
At this point you will have a good idea of what you can afford and the type of area you will want to invest in. Taking that information into consideration, you are ready to embark on your home search. If you don't know much about the city to which you are moving, you will want to start by finding areas that meet your criteria and then narrowing your search to particular properties in those areas.
There are a few ways to go about this. Possibly the most efficient way to find homes is to allow your real estate agent to keep you up-to-date on available properties that meet your criteria, and then allow your agent to screen them for you. When your agent presents you with a home that interests you, he or she can arrange for you to tour it at your convenience.
You can find available homes by reading local real estate publications, contacting local Neighborhood Associations, visiting the local Chamber of Commerce, looking on the Internet, or driving through neighborhoods that meet your needs. Driving around a particular area looking for a home that is for sale is good because you can actually see the house, but it can be very time consuming and very "hit or miss."
STEP 6 - NEGOTIATING TO BUY
Once your offer is made you may need to negotiate with the seller
to reach an agreement. Keep in mind almost everything is
negotiable when you are buying a house. This can give you a great
deal of leverage in the buying process, that is, if you have
adequate information and you use it in an appropriate manner.
Some things you may negotiate:
* Price
* Financing
* Closing costs
* Repairs
* Appliances and fixtures
* Landscaping
* Painting
* Occupancy time frame
Counter offers happen frequently. Remain in close contact with
your real estate agent so you can quickly review any changes from
the seller. Remember...bargaining is not a winner-take-all deal.
It is a business process that involves compromise and mutual
respect.
STEP 7 - SERVICE
PROVIDER COORDINATION
After your offer is accepted, your agent will help you coordinate
the activities of service providers and serve as your advocate
when working with them. Your agent will make sure these vendors
have access to the property to perform their procedures and will
oversee the execution of those procedures on your behalf.
One service you may need is a home examination. An inspection of
the property, the foundation, and the surrounding environmental
may be needed to make sure the property meets the standards set
forth in your written agreement. If there are issues or
inconsistencies brought to light during this time, it may delay or
even nullify the contract.
Insurance is another item that will need to be taken care of.
Experts recommend you obtain title insurance equal to the full
replacement value of the home. This kind of insurance is purchased
at closing and protects the buyers in the unlikely event that the
title to the property becomes invalid. Homeowners insurance
protects against theft, fire and liabilities. It often includes
things such as bicycles, furniture and jewelry. Flood insurance is
generally only necessary for flood-prone areas. The federal
government issues this kind of insurance.
In addition to aforementioned types of insurance, you may want
additional assurance for your new home. Home warranties are one
way to protect yourself after you buy. Warranties for new homes
protect against plumbing, wiring and structural defects. Existing
home warranties cover things like major appliances and structural
problems.
Having these procedures done in a timely and professional manner
is a must. Investigate each service provider to make sure they are
reputable and have a clean operational history. Your agent's
experience in this area will be invaluable.
STEP 8 - BEFORE YOU CLOSE
As the closing date (otherwise known as settlement or escrow)
draws near you will need to be in contact with the escrow company
or closing attorney and your lender to make sure all necessary
documents are being prepared and will be delivered to the correct
location on the appropriate date. Find out what form of payment
you will need to bring to the closing for any unpaid fees. Make
sure that your payment is made out to the appropriate party.
These days, buyers and sellers don't even have to be in the same
room to close a deal. Thanks to computer automation, signed
paperwork can be delivered overnight to both parties.
STEP 9 - CLOSING ON A HOME
Closing is where ownership of the home is legally transferred from
the seller to the buyer. It is a formal meeting that most parties
involved in the process will attend. Closing procedures are
usually held at the title company's or lawyer's office. Your
closing officer coordinates the document signing and the
collection and disbursement of funds.
In order for the closing to go smoothly, each party involved
should bring the necessary documentation and be prepared to pay
any related fees (closing costs). There may be more than one form
of acceptable payment for your closing costs so ask the closing
officer which form of payment will be required and to whom it
should be paid.
Sellers sometimes pay for a portion or all of the closing costs,
depending on local market conditions, terms of the purchase
contract, and the seller's cash and timing considerations. Any
such concessions should be acknowledged in writing. Most lenders
will allow a credit from the seller to the buyer for the
non-recurring closing costs. However, they usually won't allow a
credit that reduces the amount of the buyer's down payment or any
of the buyer's recurring costs, such as expenses for fire
insurance premiums, private mortgage insurance (PMI) or property
taxes.
Congratulations on the purchase of your new home!
Now that you have taken ownership of it you will need to have your electricity, cable and phone set up. Also be aware of typical homeowner expenses such as Neighborhood Association fees, landscaping costs, and annual taxes and budget for them accordingly.