The Steps to Buying a Home
This page entitled “The Steps to Buying a Home” gives a general overview of what may typically be encountered when buying a home. Because every transaction is slightly different, one may encounter some additional steps when making his or her purchase. The intention of this information is to give prospective home buyers an overview into the process of purchasing a home. At Neighborhood Realty Services, we would like to have the opportunity to personally assist you through the process of buying your home.
STEP ONE : PRICE RANGE:
How much of a home can you afford to buy? This is one of the most important steps in buying a home. All too often, an anxious buyer will begin to look for a home without knowing what he or she can comfortably afford. By speaking to someone who is knowledgeable in the area of real estate financing and by obtaining a pre-approval from a lending institution, big disappointments can be avoided when the buyer begins to look for a home within his or her price range. During the pre-approval process, the buyer will learn the mortgage amount that can be obtained and then know how much of a home he or she can afford to purchase. If you refer to information under Financing within this website, you will gain a brief overview to the different types of financing options available today. There are certainly going to be additional ways to finance a home, beyond what is listed on this site, but this should give a good starting point to understanding real estate financing.
STEP TWO: LOCATION:
Determining where you want to live. By the time one reach step two, one should know how much money he or she can afford to spend. Now it is important to determine where one wishes to live. If you can afford to spend $50,000 for home then you should begin to look for homes within the various neighborhoods that have that price range of homes available. If you are hoping to find a home worth $50,000.00 in a neighborhood where the homes sell for $200,000.00 then you will probably never find a home. Sometimes one will find a home at a much lower price than the going prices in a neighborhood, but often, that property will be in need of renovation or have a serious problem attached to the home. Once you find the neighborhoods which match your price range, you may want to look at the various conveniences offered within each of the different locations.
STEP THREE: SALES ASSOCIATE:
Selecting a sales associate to work with while buying your home is another step in the buying process. Before you conduct any substantive discussions with a sales associate, it is important for you to understand the various agency options available to you. Often today, many buyers choose to have the sales associate which he or she is working with represent them throughout the transaction. The job of the sales associate changes based upon whom he or she is representing.
STEP FOUR: LOOKING AT HOMES:
A fun part of shopping for a home is in the looking at the various available homes on the market. One should keep an open mind while looking at the various homes that are being offered for sale. Be careful not to set too many limitations in what you will consider as a possibility. When looking at a home, it is important to not get caught up in the current furnishings, decorations, and general appearance, as these items will typically not remain with the sale of the property or will be changed by the buyer. However, it is important, to look at the floor plan and mechanical/structural condition of the home, as well as, the topography and lot location. After looking at the various homes available for purchase and comparing those which have caught your eye, you should be able to select one of the properties to purchase.
STEP FIVE: DETERMINING A PRICE:
Once you have chosen the property you wish to buy, the next step is in determining a realistic price for the property. Just because there is a list price for the property you have selected, it doesn’t mean that the asking price is what you should pay for that property. It is important to look at what the other homes of similar size, style, and condition have sold for within the neighborhood. By looking at these factors, a realistic range of value for the property can be determined.
STEP SIX: PREPARING THE OFFER:
Now that you have selected the home you wish to purchase and determined its range of value, you and your agent will begin to prepare the written Agreement of Sale. You must remember this is a contract. You will need to make several decisions like, which inspections you would like to have conducted on the property, closing date, inclusions, the price you wish to offer, and the amount of the earnest money deposit, to name a few. You need to fully read and understand the Agreement of Sale before signing this contract. Upon signing the Agreement of Sale, your agent will then explain the process of submitting your offer to the seller.
STEP SEVEN: THE NEGOTIATIONS:
Sometimes the negotiation process is very painless, while other times it can be a very stressful part of the buying process. It is important to remain calm throughout the negotiations. You will be required to make some very important decisions during this step. When you and the seller come too agreed upon terms, you will then be required to follow the terms of the contract for the balance of the transaction.
STEP EIGHT: INSPECTION PROCESS:
Under the terms of your agreement, you may have chosen to complete several inspections on the property. It is important to remember the time frames and the specific requirements in which these inspections are to be completed. Remain calm! Because you are buying a used product, you need to expect a few problems to surface during the inspection period. This is normal and doesn’t mean that you have just chosen the only house in the western hemisphere with a few problems. Again, remain calm.
STEP NINE: MORTGAGE PROCESS:
Even though you were pre-approved prior to purchasing the home, you will now need to complete the mortgage process. Again, you must follow the terms stated in the Agreement of Sale to remain in compliance with the contract. The lender will require you to supply various documents in order to complete the final mortgage approval. The more diligent you are in meeting the lender’s requests, the less stressful this period of your transaction will be for you. Once the lender has approved your mortgage, you will receive a written commitment letter that outlines the terms of your loan. It is critical that you read this document and make sure it matches the terms of the loan which you had requested.
STEP TEN: CLOSING:
Once all the conditions of the contract have been met, the final settlement date for the transferring of the deed will be arranged. You will need to secure a homeowner’s insurance policy for the property. Likewise, you will need to make arrangements to have the utilities transferred into your name. A final walkthrough should be completed at the property prior to the closing. While at the closing, you will be required to sign numerous documents, in order to finalize your mortgage and complete the ownership transfer of the property into your name. This is actually an exciting moment when you become the new owner of the property. At Neighborhood Realty Services, we would like to have the opportunity to personally assist you through the process of buying your home. What has been outlined on this page is some general steps in the buying process and does not mean that you will not encounter variations in the buying process.