Smooth Home Buying Process in 8 Steps
When buying a home there is a process, each process is different, but these are some of the basic steps to help keep you on the right track. These steps are just a broad outline on some of the most common steps I tell my buyers to go through when purchasing their new homes. Don't take these as the "routine" in the real estate buying process. Buying a home is never a routine process, and each transaction is different.
Step 1. Find A Real Estate Agent
When buying a home, it's best to use an experienced real estate agent. Real estate agents will aid you in the process, help you fill out contracts, negotiate pricing on your behalf, and you don't have to pay them. The real estate agents are paid by the sellers of the home you buy. Finding a good agent is key to having a smooth transaction. Talk to friends, talk to family, and ask them if they have any suggestions for a good agent. If you don't know anyone that knows an agent, go online and interview multiple agents until you feel comfortable with one.
Step 2. Shop For A Mortgage
Once you have an agent, ask them for some names of reputable lenders in your area. Real estate agents usually have a pretty good beat on good lenders. They deal with them on a daily basis, and can tell you which lenders are easy to work with. Just like any business, there are bad apples, don't just go on the internet and get the cheapest lender you can. That may seem like a smart idea, but in the lending industry, cheap isn't a good thing. A bad lender can hold up your buying process, which could cost you more money, and can ultimately lead to you losing the home of your dreams.
Step 3. Determine Your Budget
After you have found a good lender, you need to sit down with them and discuss finances. This is one of the most important parts when buying a home, or any home for that matter. Your lender should be able to give you an estimate on your interest payments, the amount your insurance policies are going to cost, and nail your payment down on the price range your comfortable with. You will also need to determine your down payment, and found out what loans you qualify for. Once you have your finances in order and a pre-approval letter, you're ready for the next step.
Step 4. Go Shopping!
Most people think they should find a home they want first, then go through the previous steps. However, this can be very dangerous for a couple reasons. First, you might find the perfect home, but you can't move forward in the home buying process without a pre-approval letter. No one is going to accept an offer on a home without some sort of assurance that you can afford the home. Second, you need to know if the home is priced correctly. By hiring a real estate agent, you are gaining expert knowledge to help you determine the value of homes currently on the market, and your agent will help you determine a good value for the home you're interested in.
Step 5. Write An Offer
Once you find a home you like, it's time to write an offer. When writing an offer, stay true to your finances you came up with when you talked to your lender. Writing an offer doesn't guarantee you will get the home, so be sure that the offer you submit is something you can live with if you don't get the home. I like to tell my buyers that their offer should be good enough to give them a fair chance at getting the home. If you come in to low, sometimes you will offend the sellers, they will reject your offer. You may also limit your negotiating possibilities if the sellers feel offended by your initial offer, they may not be willing to work with you. If you low-ball be prepared to lose out on the deal, but if it's a risk you are willing to take, then I say go for it.
Step 6. Earnest Money
Once your offer was accepted, you need to provide an earnest money check. Sometimes you can submit your earnest money with the offer, but I like to submit the earnest money once the offer has been accepted. What is earnest money? Earnest money is a good faith deposit that goes with your offer. It's a signal that you are serious about purchasing the home, and it also gives the seller a little leeway in the negotiation time lines. For example: When you write an offer you have a certain amount time to close the deal, if you can't close on time, or you are unable to get funds from your lender, you will forfeit the earnest money to the seller.
Step 7. Constant Contact
Now that you have an accepted contract on your new home, you need to stay in constant contact with every party involved. Talk to your agent throughout the process, they should be calling you at least 2 times a week to keep you updated on your deadlines. Keep in contact with your lender and make sure that any paperwork they need is gathered and submitted in a timely manner. Keep in contact with your inspectors, and make sure that any repairs that are needed are taken care of. Buying real estate is a time sensitive process with penalties attached. If you miss your deadlines it's going to hurt your pocket book. Stay on top of your deadlines, your agent, and your lender to be sure they are getting things done on time.
Step 8. Closing The Deal
You made it, your finally ready to sign the papers and move into your new home. If all goes well, signing papers is going to be the easiest parts of the transaction, but it can also be the most frightening. A lot of buyers are extremely excited when they sign papers, but soon after they feel overwhelmed. Buying a home is probably going to be the most money you will ever spend, and at some point you are going to feel overwhelmed. This is called buyers remorse, and you are not alone. Just remember the reason you started looking for a home, you were probably sick of paying rent, needed more room, or you wanted to invest in your future. If you focus on these positives, you will soon feel the comfort of owning your own home. Congratulations!
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