by John Griffin
If you’ve ever gone through the home buying process then you can relate. If you’re a rookie then I’m sure the task can present daunting, at the very least. The good news is our local market is pretty lucky. Lucky to have a vast array of professionals with expert knowledge and lucky that we live in a market that retains value and where real estate is booming.
Still, it can be scary to make such a big commitment with no guarantee that your investment will be a good one. Home ownership is generally a smart, long-term move, but you’ll want to ensure that you’ve prepared yourself as much as possible before embarking on the journey. Lean on the pros. Surround yourself with a team of professionals that will guide, consult, and steer you towards a sound, financial decision. While getting your finances in order is certainly a must, there are many other factors to focus on throughout the process. Chances are, if you’re reading this then you are fairly close to taking the home buying journey on yourself.
Follow these important steps and you’ll be well on your way to home buying success.
Step 1: Find a Lender (that you trust)
Approved or not approved? This is honestly the first question you need answered. Of course, how much can you afford is pretty important, too. Financing is honestly where most deals-gone-wrong get hung up. Look for a lender that will go the extra mile to explain all costs involved. How much for the down payment? How much money do you need in the bank? What about closing costs and prepaid items? Are there any special programs that you may qualify for? I’m a big believer in going with your gut. Find a lending professional that is willing to take the necessary time to make sure you fully understand and are comfortable with the information at hand. This is a 30-year commitment in many cases. You better be very certain you have the right pro in your corner. Ask for referrals and it never hurts to talk to more than one. Also, be sure they verify your financial records, fully. You don’t want to go through the entire process, get one foot out the door; only to find out they didn’t properly vet your situation correctly up front. They should provide you with a letter of Pre-Qualification that says your ducks are in a row.
Step 2: Find a Realtor (that you can work with)
This is your right hand man (or woman)! Honesty and trustworthiness are paramount when it comes to finding the right real estate agent. While experience is definitely a plus, it’s not always the most important factor. You want an agent that is going to go to bat for you 100% of the time. Someone that is putting your needs at the forefront of the experience. A good real estate agent is a friend, counselor, relentless negotiator, and sometimes a talk-you-off-the-ledge’r! Definitely ask friends or even your lender from step 1 for a couple of recommendations.
Here are a few good questions to ask to learn more about the agent you are potentially hiring:
1. Do you have a testimonial from a previous and recent client?
2. How long have you been an agent?
3. What is your communication style/philosophy?
4. Do you have a team or others I’ll be working with?
5. What do you love about your job?
Step 3: Find A Home (that you absolutely love)
Now you know how much you can spend and you have a realtor to help you find the perfect home. Talk to your realtor and discuss what the “must-haves” are, as well as the “wants” you may ultimately be willing to compromise on. Think bigger than just the color of the kitchen or the floor plan. For instance, do you want to be within walking distance of restaurants? Do you want space between you and your neighbors? Or is proximity to a good school the most important factor?
Now you can start your on-line search and your realtor will set up appointments to begin touring homes. Take along a notepad and jot down your thoughts as you approach each home. Here are a few questions you will want to ask yourself.
1. Can you imagine yourself living there?
2. Are the other homes on the block well maintained?
3. How much traffic does the street get?
4. Is there enough street parking for your family and visitors?
5. Does everything in the house look like its in working condition?
Remember don’t rush into anything. After all, this will be one of the biggest purchases of your life!
Step 4: Make an Offer
Once you find the house you want, move quickly to make your bid. In many cases a home for sale will invite multiple offers. Your real estate agent will walk you through the steps required to make an offer on a home. Your offer could include earnest money that will apply toward your down payment on the home and may include contingencies such as hiring a home inspector. Expect some negotiation, and discuss a competitive offer with your agent. Be creative about finding ways to satisfy the seller’s needs. For instance, ask if the seller would throw in kitchen and laundry appliances if you meet his/her price—or take them away in exchange for a lower price. Once you reach a mutually acceptable price, the agents will draw up a contract to purchase that includes an estimated closing date (usually 30 to 45 days from acceptance of the offer).
Step 5: Get it Inspected
This process usually includes getting a home inspection to make sure you haven’t missed any hidden problems on your walk-throughs. You’ll want this accomplished during your “option” period—a short window where you can walk away from the deal at little to no cost. A qualified inspector will check the foundation of the home, plumbing, electrical systems, the roof, walls, and visible insulation. An inspector will also look for signs of mold, asbestos, and pests. If issues are found, negotiate for the current owner to fix them or take the cost of repair off the closing costs.
Step 6: Get Final Mortgage Approval
Once your offer to purchase is accepted, you’ll work with your lender to get final approval for your home purchase by the date specified for the closing. Lenders have a wide range of competitively priced loan programs and every homebuyer has their own priorities when choosing a mortgage. Some are interested in keeping their monthly payments as low as possible. Others are interested in making sure that their monthly payments never increase. And still others pick a loan based on the knowledge they will be moving again in just a few years. At some point in this process you’ll be asked to lock in your interest rate. My advice here is to lock a rate you feel comfortable with and never look back. Rates can change daily and you’ll drive yourself crazy trying to guess the perfect day to lock it in. Property taxes and home owners insurance are often part of the costs involved, so make sure you know all funds expected at closing.
Step 7: Close the SALE
As you can imagine, there is a lot of paperwork involved in buying a house. Your realtor or lender will arrange for a title company to handle all of the paperwork and make sure that the seller is the rightful owner of the house you are buying. Title companies serve as the checks and balances between all parties. Remember, this is supposed to be an exciting time! You’ve done all of the hard work and it’s a celebration. Drink it in. Most of the time your realtor and lender will be there with you to make sure the process goes smoothly. Take a picture to remember the moment. Grab those keys to your new dream home and look fondly forward with the knowledge that you’ve made a wise financial decision that you and your family will enjoy for years to come.
So, yes, it IS kind of a big deal to buy a house! The truth is, when you align yourself with the right team of professionals you’ll quickly realize that they can handle most of the heavy lifting for you. However, knowing what to look for and what to expect is critically important. I hope you can go into your experience a little more educated, now. Don’t be afraid of it. Just commit to yourself and your family that you’re going to follow these simple steps to home buying success along the way. A big deal maybe, but I’m very confident that you’ve got this. One last piece of advice: Don’t get so caught up in the process that you forget to enjoy the ride! After all, you’re about to be a homeowner!