All I Want for Christmas… is My Very Own Home!

Homeownership is the best gift you can give yourself and your family. Let’s take a look at all of the steps to get you there. Don’t worry. It’s not as hard as you think! With preparation and guidance you can open the door to your very own home.

1- Get a pre-approval from a mortgage lender.

The first step in the home-buying process is to get your financing figured out. Talking with a lender early in the process (months ahead) will help you know what you need to do to prepare. You may need to improve your credit, pay down debt, or save more money. The lender can guide you in these steps. You will also find out how much you qualify for so you know which homes are in your budget. You can start looking at homes online to see what features and areas are important to you. 

2- Meet for a buyer consultation.

Meeting with your realtor often coincides with getting your financing set up. Most realtors have trusted lenders that they have worked with and can give you several recommendations. Your realtor can also help you understand what all the numbers mean for your closing costs and monthly payments. Once you have a budget in mind, he/she will gather all of your home criteria and set you up on a home search through the MLS. This will include location, size of home, garage space, price, etc. You will then be alerted to new listings that match your criteria so you don’t miss out! Your realtor will help guide you in understanding what homes will work for your budget and needs.

3- Look for houses.

Once your financing is set up and you are receiving new listing alerts, it’s time to look for houses! Your realtor will also be monitoring what listings are coming on the market each day to help make suggestions. Together you will watch for homes that match your criteria that could work for you. As soon as you see something you like, contact your realtor so that he/she can set up a showing and walk through of the home. You will probably need to look at several homes before you find something you really like. 

4- Make an offer.

You walk into a home and… you love it! Now it’s time to make an offer. Your realtor will guide you through the process of deciding all of the terms – offer price, earnest money deposit, inspections, and so on. He/she will add the mortgage terms and any other items necessary for the offer, such as response date and closing date, and any inclusions or exclusions. There are a lot of details to the offer so your realtor will take you through each section and make sure you understand it.

5- No low ball/counter offers.

Some buyers want to “get a deal”, but it’s always wise to listen to your realtor. We follow the market value of similar sold homes to know what is a fair offer price. A low ball offer will often turn a seller off. If there are competing offers it’s very important to write a strong offer and maybe even include an escalation clause. Your realtor may end up negotiating price and terms for you, but it’s always best to start with a fair offer. There are few scenarios when a low ball offer works so be reasonable in your expectations.

6- Inspections.

On your offer you may have elected to complete several inspections, such as a home inspection and a termite inspection. There is a time period in which you have to get these inspections done (usually 10 days). You will then receive an inspection report outlining the condition of the home. From this you will reply to the seller on whether you accept the property in its present condition, ask for repairs, or ask for money back to fix items yourself. During this time your realtor may negotiate for you on repairs and/or money back. Once you and the seller agree, an addendum is signed by both of you on the repair items or money back you have agreed upon.

7- Appraisal.

Once you’re under contract, your lender will order an appraisal. The appraiser goes out to the home to review all of its features and condition. He/she will look at comparable properties and decide what the home is worth. It’s important that the appraisal amount is at least as much as your offer amount (or more). You can only get a mortgage for the appraisal amount so if it comes in low, then either negotiations for a price reduction have to happen or you have to pay cash out of pocket to make up the difference. Your realtor will help you understand if your offer is fair market value, or what your options are if you are competing and have to offer an amount over list price.

8- Homeowners insurance.

As you are moving toward closing on your new home, the lender will ask for several things. One of these will be that you set up your homeowners insurance policy. The yearly cost will be divided into your monthly payments, and the lender will collect 6-12 months of payments ahead to escrow (this is part of your closing costs). 

9- Don’t do anything to delay your mortgage process.

There are a lot of things that can delay your loan or even cause you to lose your financing. Your realtor and your loan officer should review these things with you, but here are several to keep in mind. Don’t open or close any credit accounts. Don’t make any large purchases (like new furniture or a car). Don’t change jobs. 

10- Title insurance.

As your lender is working to finalize your loan, the settlement company will be running a title search on the property to check for any liens, easements, or other concerns. They ensure that you are receiving a clear title to the property you are purchasing. They will also provide title insurance, which will defend the title as long as you own the home against any claims, etc. The title company can review all the benefits of the title insurance so you will know what they cover. 

11- Home warranty.

A home warranty can be provided by the seller or bought by the buyer. A home warranty can range from basic to comprehensive (which reflects in the cost) and is for the first year you own the home. Some items covered could be appliances, heating and cooling, roof, etc. If you are using up most of your savings for your closing costs, this could be a good option to make sure you don’t have major expenses that first year of ownership. Your realtor can review different plans with you.

12- Closing day.

Wow, you made it through the inspections, the appraisal, and all the lender paperwork! It’s finally time to close on your new home. You will go with your realtor for a pre-settlement walk through of the home to make sure everything is as expected. Then you will go to the settlement company to sign all of the paperwork. You will either bring a certified check or have the closing funds wired ahead. After all the documents are signed, the sellers will give you keys and garage door openers to your new home. This is also a good time to ask the sellers any questions you have (like what day the trash pick up is). You will get copies of your documents and a nice closing gift from your realtor 🙂 Then it’s time to celebrate and head to your new home!!

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