How to Buy my First Home
1. Acquire Knowledge.
If you're a first time home buyer then chances are your feeling a bit overwhelmed with all of the steps you'll need to follow to enable a successful closing on your first home. Knowledge is power and obtaining as much information on the front end will provide a much smoother transaction on your journey on the back end. Many first time home buyers will start their real estate journey reading internet articles on the home buying process, reading real estate blogs or searching out a Real Estate agent that will help them understand the buying process. Do all of the above and your on your way to a smoother transaction.
2. Lender Interview and Loan Pre-qualify or Pre-approval
If you are a cash buyer then this section will not apply, however, if you will be financing the home and have not arranged a Lender interview, this should be an early step. A Lender interview will start the pre-qualification or pre-approval process. All buyer's will need to know either their maximum loan amount or their comfort loan amount so they do not over search properties out of their price range. Don't start your home search without it.
3. Choosing your Real Estate Agent.
An abundance of Real Estate Agents are available for your choosing. You should plan on interviewing several agents and make your decision based on Trust, Experience, Comfort, Availability, Tools and Communication before you establish a Buyer Agency.
- Trust - You should have full confidence the buyer agent you choose to work with will be your advocate and represent only your interests while getting you to the closing table.
- Experience - In what could be one of the largest financial decisions of your lifetime, make sure you are working with a full time buyers agent with years of Real Estate experience. Agents also need to know the communities they serve and be familiar with the available inventory.
- Comfort - Seek out a buyers agent that will cooperate instead of dictate what needs to be done. You should never feel uncomfortable when looking for answers, asking to see properties or inquiring help with vendors in another field of expertise.
- Availability - Before you hire a specific agent, inquire if s/he will be available throughout the buying process or if other associate agents will fill in and handle the transaction. If you hire a buyers agent and then they go on vacation for a couple of weeks, expect a break in continuity. If your only available during certain days or times of the week for showings, make sure your Real Estate agent also works those days and hours. You do not want to be under contract with an agent that can't serve you.
- Tools - Your buyers agent should be providing you with a shared folder for copies of all documents that you have signed, automatic listing alerts, and up to date statistics in the areas you are searching for a home. In addition s/he should be thoroughly knowledgeable with the MLS and have a complete mobile office with contract software allowing digital signature capability for quick response on writing offers.
- Communication - Open and transparent communications should be provided on an ongoing basis of your choice - telephone call, email, text or a combination to keep you informed. Before you hire your buyers agent, discuss how you prefer to receive communication and how often you want to receive it.
4. Viewing Homes
- You will decide which properties you want to see that fits with your goals.
- The properties you select will be routed and scheduled for viewing.
- Together we will look at the selected properties.
- After a few showings everything will blend so take notes of each property to help you remember.
Making an offer which appeals to the Seller includes key points such as:
- Proof of loan qualification. ( A pre-approval letter from your lender)
- Price terms and conditions. (As written in the offer)
- A limited number of contingencies.
If you have signed an agency agreement with your Realtor and s/he is working with you as a buyer's agent then, with your input, your Realtor will be an advocate for you and negotiate in your best interests. Negotiations are the techniques used to position you in receiving the most favorable deal.
If you are not working with a Real Estate Agent - Use caution when you try to get a deal when working directly with the listing agent on the home s/he has listed. In this arrangement the listing agent will not negotiate in your favor. You may be told you are getting a great deal, but, in reality, the listing agent is advocating for the seller and negotiating in the sellers interests.
7. Under Contract
After both parties (Buyers & Sellers) have agreed to all written terms, conditions, sellers concessions, contingencies, and any other provisions agreed upon and have signed the purchase offer and any counter offers and all of the negotiations are complete, you are now under contract.
8. Earnest Money
After your contract is accepted and ratified by all parties you will need to provide an earnest money check, money order, or other certified funds as defined in the purchase offer terms and deadlines.
9. Dates & Deadlines
Many dates and deadlines will be in the contract and most will be transparent to you. Most of the activity will be behind the scenes from lenders, title Companies, appraisers, inspectors, and other organizations. The contract will be managed by your real estate agent to stay in compliance on all of your required dates & deadlines, while working with all parties toward a common goal of a successful closing.
10. Sellers Disclosures
Sellers Disclosures will help you as the Buyer to better understand the home you are purchasing as seen through the eyes of the Sellers. You will receive Lead Based Paint Disclosures (if applicable), seller's Property Disclosures, Square Footage, mold, and source of water disclosures.
As a doctor performs a physical, so does a home inspector let you know the physical health of a home. An overall evaluation of the home will be performed during the inspection as it relates to structural, electrical, safety and environmental, plumbing and mechanical operation. Having a home inspection by an unbiased third party is not only prudent, but, will provide you with the confidence of knowing the overall condition of your prospective home.
12. Appraisal and Verification
Your lender will order an appraisal to determine the value of the property. The appraisal is performed for the benefit of the lender, and provides the lender confidence of knowing the property value will support the loan. The lender will also go through an underwriting process to trust, but verify the information you have provided them is correct before issuing a Loan Commitment for closing.
Many parties will be involved to promote a successful closing. Your Realtor, Lender, and Title company will be communicating and working on your behalf throughout the transaction to successfully close the sale. At the closing table you will sign both loan and real estate documents as required. After all documents have been signed and funding occurs, then you will be a new homeowner!
After closing, it is customary to take possession of your new home as soon as leaving the closing table or up to several days later or as negotiated in the contract. Then you get to start moving in!