It is sometimes overwhelming when wanting to buy your next home, especially when the process is not clear. We will break down the general process and procedures and what to expect.
Phase I – The Research We start first by determining where you would like to live and own your home. This is a lite preliminary search to determine that the area you want to live in has homes in your expected price range.
Once you feel comfortable with the price range and you want to move forward with home ownership, you should meet with a mortgage professional who will do a pre-approval for your loan. This exercise will give you a good picture on what your payment will be and how much of a home you can afford to buy.
After your meeting with the mortgage professional you will have a clear idea of the kind of house or home if you feel comfortable buying. At this point you are ready to meet with real estate professional.
Phase II – Finding Your Home
The search usually starts using the internet to quickly list all the properties that match your criteria. This is an effective way to eliminate a lot of homes that are not suitable for you. Some of the things to consider when buying a home:
1- Size of home (Square Feet)
2- Number of Beds
3- Number of Baths
4- Is a backyard important
5- Two story home, ranch single story, or apartment unit
6- Proximity to work
7- School district
Once a set of properties have been identified, we will schedule appointments to visit each. Once you identify a property that you are interested in and want to make an offer, we move on to the next phase
Phase III – The Offer and Negotiation
Before we put an offer, we will have to determine if the listed price is an acceptable market price for the house. Once we decide what is a fair price to offer, a contract is written and signed and submitted to the sellers along with a copy of the Earnest Money and a lender letter from the mortgage broker. After submitting, we wait for an answer from the sellers. They could accept our offer or make a counteroffer.
Once both parties come to agreement, we are now considered as being under contract
Phase IV – Under Contract
The first step at this point is to deliver the earnest money check to the seller’s title company. A copy of the fully executed contract sent to your lender so they can start processing your loan.
Within the first week you would schedule and inspector to inspect the property and give you an inspection report. Inspection costs can run anywhere from $200 to $500 depending on the size and type of the home. Using the inspection report, we would submit to the sellers an inspection notice or objection listing items or issues that we need addressed, fixed or resolved. The sellers at that point will respond either accepting our proposed inspection list or they can counter offer. After both parties agree we now move on to setting up the property appraisal that is required by the lender. Typically, your lender sends out the appraiser.
In the meantime they are other issues that have to be taken care of such as selecting your home insurance company. This can be the same company that you have with your auto insurance. But you can go with any insurance company you want. Your lender will also have some requirements and documentation from you.
Once everything is completed and satisfactory you are now ready to close on your house. This means going to the title company on the determined closing date found in the contract and sign the necessary paperwork that transfers ownership of the house to you. Typical closing duration is about an hour.
Other things to expect:
Keep in mind that getting a mortgage loan to buy a home has costs associated with it. You should plan on spending an average of 2% to 3% of the home value in closing fees. This includes the appraisal cost.