A lot has changed, but a lot has stayed the same when it comes to purchasing a home. It can be overwhelming, but so much fun! For instance, packing…mostly not so much, but sometimes you run across things that make you smile, but all this work is over-shadowed after your move and the moving truck has gone, and you’re trying to find a plate to eat left-over pizza on and you realize…you’re home! Truly home! That smile just won’t leave your face.
Buying a new home is nothing like buying a car where you go find a car, sign the papers, and drive the car home. Buying a house is usually about a month-long process from the time you have picked out a house to the time you will actually “close” or own the home. It is very important to select a great realtor and work closely with them. (See this article for more information: https://karenexprealty.com/2017/06/19/7-essentials-for-choosing-a-real-estate-agent/). In order to help make this experience so much more enjoyable and less stressful, I’ve outlined the quick-n-dirty process of home buying.
- WHAT CAN I AFFORD? You can do the simple math yourself. Take your gross monthly income and take it times .45. Your total debt payments and your mortgage payment each month cannot exceed that. This does NOT include utilities, groceries, etc., only your debt i.e. credit card bills, car payments, and student loans. That will tell you how high you can go for a house payment. If you feel like you are ready, then contact a realtor to get some ideas of GREAT lenders. There are lenders online that will try to get your business. Beware! They are not all the same and some can actually slow down or even stop your home purchase. There are lenders, then there are GREAT lenders. Your realtor can give you some ideas. Then, contact that lender and get PRE-APPROVED. This is so important because a seller will usually not accept an offer without the pre-approval letter from your lender.
- LOOKING AT HOUSES AND SELECTING ONE. Contact your realtor who is your buyer’s agent. Give them a list of criteria that you are looking for. They will set up the showings and MUST go to showings with you. Then, select a house. Your agent will help you get all the documents together and write them while all you will have to do is make decisions and sign. There are several different documents that are required, so be prepared.
- NEGOTIATION AND ACCEPTANCE. Once your agent submits your offer, be prepared. The seller will respond in 3 different ways. 1. They will accept your offer as written, 2. They will counter-offer which means they will respond with a possible different amount or closing date or other item of which you will have to decide how to you’d like to respond, or 3. They will reject your offer completely.
4. INSPECTION PERIOD and TITLE COMMITMENT. Once you have an accepted agreement, you are considered “under contract” or “contract pending.” You realtor will help you decide on a good home inspector and title company. It is ultimately your choice, but your realtor can recommend some good inspectors and title companies who are very thorough. Title work is paid for through the proceeds at closing. (Title work is imperative because it makes sure you obtain a “clean” title. You do NOT want any issues here.) You pay for the inspection service up front, which is usually around $450 depending on the size of the house and location. Your realtor will order the title work and help you set up the appointment with an inspector. You usually have about 10 days to get the inspection done. This is a very important step–one that you will pay close attention to. The inspector will point out every single detail that could be a problem. It is overwhelming, but don’t let it deter you. Go over the report with your agent, and select the items that are potential “deal-breakers.” At this point you will either accept the house as is, or you will offer to re-negotiate. Go over all this with your realtor and proceed closely with them through this vital step.
5. APPRAISAL. Following the inspection and renegotiation period, your lender will order an appraisal. You don’t have to do anything at this point, but the house will need to appraise at or near the purchase price. If it does not, you’ll have some decisions to make with your lender and realtor’s help.
6. LENDING. At this point your lender will work with your title company to get all the documents needed and everything in place for the closing. You may have to supply your lender with more documents during this phase, which is called “underwriting.” It is important for you to get all requested documents to your lender as quickly as possible so that you do not delay the closing.
7. HOMEOWNERS INSURANCE, UTILITY CONNECT, and MOVERS. Here is a very handy tool that can help you get all of this set up in one place: https://www.utilityconnect.net/karenr . You can locate an insurance agent on here that will offer competitive rates. Once you find that insurance, you will want to get this information to your lender. In addition, there is moving supplies and movers. About a week before your scheduled closing, you will want to order all utilities to be placed in your name — water, sewer, electricity, gas, internet, etc. Otherwise, this can be daunting making all the calls or trying to get everything set up on your own.
8. CLOSING. Your title company will call you a few days before the scheduled closing date and get you a time set up to sign all of your closing documents. If you don’t hear from your title company within 3 days of the closing date, call your realtor. They will contact the title company and get things moving on this. At your scheduled time and date, show up on time with your drivers license or proof of citizenship. Your title company is required by law to get a copy of all of this in order to prove that you are who you say you are. They will also let you know the exact amount of money and in what form (certified check, wire) you will need to bring the down payment and any remaining closing costs with you to the closing. There will be a “mountain” of documents! Be prepared, but your closing agent will help walk you through all of them and tell you what you are signing. Allow about 30 minutes to do all of this. Depending on your purchase contract, but usually after you sign, your realtor will hand you the keys, and congratulations! You are now a home owner!
Purchasing a new home for you and your family is a very big step, but one that will reap rewards far into the future. It helps build wealth, provides a place where you feel loved and are comfortable, and gives you things to look forward to, from planting flowers to finding ways to making your guests feel welcome. A new home can be the bright spot to your future. I am here to help with any or all of this. Call me anytime. https://karenrothermich.exprealty.com/ for more information and to search for a home.