Steps to Buying Your Perfect Home
By Jacey Cook – Aug 1, 2017
Although time consuming, buying a home should be exciting and fairly stress-free if you start early and follow the steps below. In my experience, the toughest buys have been with clients who are ready to look but either a) haven’t worked on financing yet or b) haven’t prepared their current home for selling yet. Once the viewing process has begun, quite frequently buyers find a home much quicker than anticipated. Financing and home-sale-readiness are just a few keys to making sure you “win” that perfect home. Read more below for my best advice!
1) Start Preparing Early – Do your research of the housing trends in your town, desired neighborhood and state. Get a feel for the speed of home sales and pricing in your area.
2) Analyze Your Current Home & Take Action to Prepare it For Listing/Move-Out – So many times, clients know what needs to be done to list their home or move-out of a rental but hold off on action until they’re ready to look for a new one. This is really too late. More than less, a Buyer finds a new home much sooner than anticipated. If the current home is not ready to sell, they can lose a deal because of a denied home-sale contingency if the home is not on the market or ready to go to market immediately. If you’re a renter, be knowledgeable about your lease and the steps and timing needed to give notice.
3) Know your credit score and take action to improve it – many credit cards and banks where your accounts are held have an option to receive your score for free online. Or, you can go through freecreditscore.com. Disputing inaccuracies and improving your score will vastly improve your options of loans and interest rates. Next step – meet with a lender.
4) Meet with / Speak with a Lender – Don’t be shy!!! A good lender should be happy to educate you on the details and meet with you to determine the level of home you can afford and are comfortable buying. It is their job to give you calculated monthly payments, interest rates, down payment options and different loan options. Before you start looking, you need to know what you can/want-to actually spend.
5) Get Prequalified for a Mortgage & Secure a Pre-Approval Letter – Once the amount you’re comfortable with spending is determined, you need to be prequalified for that loan. This is a quick process if you know your income, assets and monthly expenses. You will need to provide some financial information to your lender such as your income and the amount of savings and investments you have. Your lender will review this information and tell you how much they can lend you which will determine the price range of the homes you should be looking at. This is all that is needed to secure a pre-approval letter which will likely be required for an offer in a very quick-turning market.
***Application for Loan – You won’t have to begin submitting financial documents until you go under contract to purchase a home and actually apply for the loan. These documents will include things such as W-2 statements, paycheck stubs, bank account statements, etc. so your lender can verify your financial status and credit.
6) Find the right REALTOR® – A good REALTOR® is vital to your success in buying a home. An agent should go out of his/her way to provide you with insight, data and details on homes and neighborhoods that may not be accessible to the public. Their knowledge of the home buying process, negotiating skills, and familiarity with the area you want to live in is extremely valuable. If you need a lender, insurance or other resources, your agent can help! Your REALTOR® will fight for your best interests and ensure the smoothest negotiation and closing possible. I can share endless example of Buyers who were disadvantaged because they were not represented and vice-versa. And best of all, it doesn’t cost you anything as we are compensated from the commission paid by the seller of the house.
7) Look for a Home / Make An Offer / Go Under Contract – You will see a lot of homes and they will start to blur together so I recommend taking pictures and making notes on the MLS sheets your agent prints out for you. Your REALTOR® will help you determine a fair offer price and do the negotiation. Once an offer is accepted, you will need to get an earnest money check to your Agent within a few days for approximately 1% of the asking price. (Maybe less in a lower priced home). This check WILL be cashed and go towards the price of the home or will be returnable if the deal doesn’t happen for a justifiable reason.
8) Get a Home Inspection – I highly recommend an inspection on all homes purchased. The Buyer pays to have an inspection and typically the Agent schedules it for them. Most of the time, purchase offers are contingent on a home inspection and the agreement of what will/will not be fixed between seller/buyer.
9) Have the Home Appraised – Typically most contracts can be made contingent on the home appraising for the offer price. Your lender will request the appraisal and it’s a blind process where an appraiser is assigned from a pool. If the home does not appraise and you have that in the contingency, you can either terminate the buy, work with the buyer to have them lower the price or bring cash to closing to reach the total offer price.
10) Work with the Title Company – Coordinate with the title company to get your final numbers for wiring at closing and paperwork completed. Schedule your closing time/day with your Agent.
11) Close your Deal and Celebrate!!