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home buyer guide
1. Determining Your Goals
Before you can find your dream home, you need to clearly determine your reasons for buying and the type of home are looking for. Because buying a home and financing are so closely related, you will also need to get a good idea of where you stand financially so you can be ready for homeownership. Keep it simple and ask yourself the hard questions. Some examples are: 1. Where do I want to live?
2. What kind of house can I afford?
3. Do I have enough money for a down payment on a home?
4. Do I have a good credit history?
5. What loan programs can I qualify for?
Once you have answered these questions, you will have a better idea of what kind of home you are looking for and what financing options are available to you. Build a plan of attack and a timeline so you can move forward with intention.
2. Build Your Team
Now that you have an idea of what type of home you are looking for and what you can afford, you need to start recruiting people to be on your team. The more people you inform of your goals, the more likely it is that you will be able to achieve them. Specifically, you want a real estate agent who knows the market, has experience in helping home buyers find and purchase, and has ties to a mortgage broker or loan officer. As we mentioned before, once you find the home you want to buy you’re going to need financing available to purchase it. A mortgage broker or loan officer can help with this by informing you what mortgage programs you qualify for, getting you pre-approved for a loan, and securing you a mortgage to purchase your home. With a real estate and mortgage professional on your side, you will have all the information and resources you need to find and purchase the home that is right for you.
3. Getting PreApproved
Before you can start viewing homes you are going to want to be pre-approved for a home loan so sellers can take you seriously. This involves tapping into the team you’ve built already and meeting with your loan officer or mortgage broker. With your approval, they will review your finances and credit history to see how much money you are able to borrow. Once this is done, your home loan expert will issue you a pre-approval letter detailing how much you are eligible to borrow. Here at Equity Smart, we have access to numerous loan programs because of our position as mortgage brokers. We are approved by over 80 different lenders, which allows us to find you the best loan program for your specific situation.
4. The Home Search
Now that you have gotten much of the prep work out of the way, you can start searching for a home! Keep in mind that the key to this process is knowing what it is you are looking for. Categorize your searches into categories to stay organized. For example, distinguish between what you “must-have” versus what you would “like to have”. Further categorize your searches based on price range, location, style of the home, etc. The more you refine your searches, the quicker you will be able to find a home that you want. Your real estate agent, your loan expert, and the internet will be your best friend while you are searching for a home. Websites like Zillow and Redfin allow people to buy and sell property along with other services such as video tours and reviews about the property. Ultimately, however, you still need to view homes in person. It is the best way to be sure about what the house actually looks like and see details of the house that could otherwise go unnoticed. It is worth mentioning that sellers are motivated to sell their property and could gloss over unattractive details of the property. The worst thing you could do is buy a home only to realize that it needs extensive repairs. The best way to avoid this problem is to visit properties with your real estate agent. They will provide with the expert analysis and support you need to make sure that you buy the home you want, with no surprises.
5. Make an Offer
After you have found the house you want to purchase, you will have to make an offer. Your real estate agent will use contracts developed by the real estate association in your area. These contracts can be quite dense as they include many clauses for different terms of the purchase. Make sure you review these contracts and have your questions answered by your agent. With the help of your real estate agent, you will want to place a competitive bid on the house. The seller can then accept your offer, counter it, or reject it. If the seller accepts your offer then congratulations! Move on to the next step. If the seller counters your offer, then the negotiation process will begin. Successive counter-offers requiring timely responses and meeting conditions will be exchanged until you and the seller either come to an agreement or negotiations breakdown. If the seller rejects your offer outright then you will have to keep searching. Don’t be discouraged! If you follow the plan you made with your real estate agent and loan expert you will find a home to call your own.
6. Financing Your Purchase
At this point, you will need to go to your loan expert and go through the mortgage process so you can finalize the purchase of your home. It involves a thorough check of your financial background including credit history, tax returns, verification of employment, etc. This process can take anywhere between 21 to 45 days so you will need to work closely with your loan expert to make sure the process is as smooth as possible. An escrow account with an escrow or title company will be opened and will handle the closing of the purchase once your loan is funded. An escrow company is an impartial third party that the buyer is able to wire money for the purchase. The deal cannot be completed unless all conditions of the deal are met.
7. The Closing and the Keys
Once you have met all conditions of the deal are met, you will meet with the seller at the final meeting in what is commonly referred to as “the closing”. Your real estate agent will tell you what documents to bring with you to closing. It typically takes one to two hours. Make sure you read all documents you sign and take your time; you’ve come this far, you can’t be lazy now. Once you sign all required documents at closing you’re finished! In a couple of days, you will be able to start moving in and enjoy life in your new home. If you liked working with your loan officer and/or real estate agent, be sure to refer them to friends and family. Also, be sure to stay in contact with your loan officer to see if you can refinance your loan under a better interest rate and save money.
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