How And Why to Buy a Home

1. Determine your price range by future monthly payment.

How much house can you afford? If you have a trust fund or you own a software company, this is an easy step. Otherwise, you'll have to consider issues like how much of a down payment you can get together, and how much you can afford to put toward housing every month (PITI payment). Knowing your housing budget based on your future monthly payment (not purchase price) will help you avoid surprises when shopping for a home. Sometimes the best place to start is with knowing your credit score and what lenders are looking for when it comes to your credit. Begin with credit... Do you qualify for any down payment assistance? FHLB  and DAP programs are out there, should you be taking advantage of them?

2. Get a REAL preapproval, not a pre-qualification!

It's best to get pre-approved before you make an offer. This makes you a more attractive buyer. Understand your pre-approved mortgage program and the information used in your pre-approval. Your pre-approval has nothing to do with purchase price and has everything to do with your future monthly payment...it is BEST to have First Time Home Buyer COACHING to help you through the process.

3. Determine your ideal location and features

This part can be fun -- what type of location are you looking for? How many bedrooms? How about a yard? A fireplace? Are you up for a fixer-upper or does it need to be move-in ready? A good approach is to make a list of what you need, what you want and what you don't want. Then figure out which characteristics are negotiable and which aren't. You can also fill out a Home Buyer Scorecard at each of your showings, this will help you when you want to compare the homes you have seen. Together we can find your dream home.

4. Search

Showings are the most important and educational part of your home buying experience. Lots of people hire a buyers agent to help with the search, and with good reason: Finding your needle in the haystack home means sifting through countless listings, contacting countless agents or sellers, and finding your way around strange neighborhoods on a schedule. Contact me to make the search a lot easier (or try my MOBILE APP), and as a buyer, it costs you nothing (it costs the seller anywhere from 3 percent to 6 percent of the sale price, typically for BOTH Agents). Keep in mind if you don't have your OWN Real Estate Agent, the sellers agent will become your Agent. If you are using the sellers Agent, you will NOT have your own advocate or anyone working in your best interest.Someone will get paid to handle your side of the transaction, make sure that person is working for you! Keep in mind, HGTV is not reality!

5. Make an offer

Once you find your dream home (or something close to it), it's time to get in there and start the bidding. I will work with your lender and current market values to help you decide what to offer -- it'll most likely be below what the sellers are asking, but going too low is risky. You could seem like you're not a serious buyer. Understanding what has SOLD in the area and is similar in style and size and condition to the home you're interested in, is key. It takes having been out there in the market and viewing homes that are now being compared to your home.

You'll need to pay "earnest money" so the sellers know you're not fooling them. When you make an offer you will need a check for $500-$1,000 to show good faith with your offer.  You will also write another "good faith" check when you sign your purchase and sales agreement. The amount of the checks is something I will help you negotiate. THIS MONEY IS AT RISK  (typically several thousand dollars) if the sellers accept your offer and you then break the contract or don't meet your guidelines. So it is important to have someone working with you to guide you through this entire process.

6. Negotiations, inspection, appraisal and crossing your fingers

Once you make your serious offer, the negotiations start. The sellers will either accept your offer or counter it. If they counter, you'll either accept their counter or make your own counter.

When (or if) you eventually agree on a price, you'll begin the parade of experts. An inspector will look over the house and let you know about any problems. It is important that you do NOT skip this step.You'll then decide if you want the seller to fix anything (or everything), and the seller will let you know if they're willing to fix anything (or nothing) you're asking for. It is important to know if the home is being purchased "as-is" when you make your offer.

In addition to the inspection, an appraiser will come in and determine the value of the home. If it appraises for less than the purchase price and loan amount you're approved for, you could end up with a problem because you probably can't borrow more than the home is worth. The hope, though, is that it appraises for at least the price you've agreed on with the seller. (If not, you need to renegotiate the price or get the rest of the money from a rich uncle.)

7. Close the deal

If you can sign your name 50 times without your hand cramping up, you're good to go for the closing. This is where you sign all the paperwork -- after reading it. Don't just assume it's all legit, have an attorney working on your behalf, beginning at the time you make your offer through til the closing. You'll turn over your money (into an escrow account) and walk out with your keys. Or, if you haven't arranged to take possession at closing, at least with the promise of keys.

At this point, your home-buying work is done, and the work of moving out of your old home and into your new one begins.

In a month or so, you'll barely remember the agony, like child birth.

 


 

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