Buying a Home
Buying a Home
Everyone dreams of owning their own home and the home buying process can be very rewarding. Buying a home is not only one of the largest financial decisions you can make, it can also be a lifestyle change. Choosing an experienced and trusted Realtor can make the purchase of your new home a smooth transaction and keep it from becoming a stressful and confusing process, allowing you and your family to focus on starting your new lifestyle.
Steps to Buying a New Home
Choosing a Realtor
Before the house hunting process begins, it’s important to choose your real estate agent carefully. A good working relationship and constant communication with your agent are important to a smooth transaction. While most people know several licensed real estate agents (maybe a friend, a neighbor, or even a relative), familiarity doesn’t always translate into the proper expertise and local knowledge needed to effectively research, negotiate, and close the sale of your new home.
I’m happy to help you get started, answer any questions, and discuss your options. Buyers who work with me will receive a comprehensive overview of what to expect throughout the entire home buying process. You will also receive my constant communication and follow up with all parties throughout the buying process from the initial consultation to closing and move-in.
Understand Your Budget
Before you determine the price range of homes you would like to see, it is very important to determine not only how much you can afford, but how much you are comfortable spending on your new home. New home expenses to consider include the down payment, closing costs, monthly mortgage payments, property taxes, homeowners insurance, any association dues or fees, utilities, and general maintenance costs. Your Realtor can help you determine some of the associated costs in your area.
Your income, debt balances, and credit history are all factors in determining your ability to borrow and your interest rate, so knowing your credit score ahead of time can help you decide if now is a good time to buy or not. Your debt-to-income ratio must also fall within acceptable limits of the home’s cost. Once you have determined these things, and if you feel that your budget has enough room to afford a new home, then it’s time to begin the mortgage pre-approval process!
The Loan Process – Get Pre-Approved First!
There are many different criteria that lenders (mortgage companies or banks) use to determine how much you can borrow, so the next step is to get pre-approved for your mortgage. You can turn to your bank or a mortgage company, but always try to use an experienced local lender to make sure you are getting the correct local advice, especially here in Florida. An online loan officer in Milwaukee may not be the best option when you’re buying a vacation condo in South Florida, you don’t want to find out 3 days before closing that your online lender can’t close the deal after all. Your Realtor should be able to provide a list of experienced local lenders you can contact.
Different banks and mortgage companies will offer different loan origination fees and rates, so when looking for a loan, be sure to get more than one loan quote so you can compare fees, interest rates, and loan terms. Mortgage lengths typically range from 15 years to 30 years with some loan providers offering other options as well. The longer the repayment term, the lower the monthly payments will be, however, the interest accrued will also be higher on a longer loan. Once you have your pre-approval, it’s time to go house hunting!
Find a Home
Once you have been pre-approved for a mortgage and know your budget comfort zone, it’s time to find your new home! Sit down with your Realtor and go over any must-haves along with your ideal wish list. Buying a home is exciting but don’t forget to be realistic, unless you are building a brand new home, there are always some compromises along the way.
Your Realtor can help you determine the right neighborhoods for you and send you previews of the listings. Once you decide on the area you want to live in, it’s a good idea to drive through on the evenings and weekends to be sure it matches your lifestyle.
When looking at homes, look at the big picture and don’t get too caught up in things that are easily changed like paint colors, carpet or landscaping. We all want something move-in ready but sometimes a few of your own personal touches or updates can turn something average into your dream home.
Making Your Offer
There is an art to making an offer on a home. Your Realtor should research the most recent comparable sales and make appropriate adjustments to determine the home’s current market value and give you a recommended offer range. The best practice is to make your best fair offer based on the current market value. There may be room to negotiate and you can always start at a lower offer price, just remember that sellers aren’t obligated to counter your offer and there may be other offers on the table. The seller may choose to accept your offer, reject it, ignore it, or counter it with different terms. Every situation is different, so there are many different ways to negotiate the offer (price, closing costs, dates), your Realtor will help you negotiate the best terms.
Home Inspection Process
Getting a home inspection is a vital part of the home buying process. These inspections ensure that the home’s roof, foundation, ceiling, heating, electrical system, walls, plumbing, windows, and doors are up to certain standards. Sometimes the bank will require a home inspection, however, many times they leave it to the buyer to purchase their own. It is extremely important to protect yourself by getting a home inspection right away, you typically have 10 days from an accepted offer to get the home inspected.
Insurance For Your Home
Lenders require that you insure your home, and home insurance policies cover the costs to fix any damages that might occur to the home. The price of this insurance is dependent on a home’s age, location and value and the insurance company you choose. Be sure to call around and get several quotes. Agents will oftentimes be able to take your information over the phone and get back to you the same day with a quote. Once you choose a company to insure your new home, the cost of that policy is normally added into your closing costs and sent into an escrow account to be paid to the insurance company directly the first year.
The Closing Process
Before the home is legally transferred to you, the closing process must occur. During this phase, you will sign all of the mortgage documents, pay closing costs, and sign various other legal documents. Once all of the papers are signed and the mortgage has funded (seller has been paid) the keys are yours, but don’t forget to change the locks! The move-in may occur immediately after the closing or at the date set in the contract and closing documents. Congratulations on your new home!