Many first time buyer's don't know where to begin in regards to the home buying process.
Here is a little information just for you!
1. What to do first.
Many first time home buyers don’t know where to start in the purchase of their new home. I always suggest to buyers if they have not already been to visit a lender, to see one as soon as possible. Visiting a lender accomplishes two things:
I know several lenders who would be happy to assist you in your loan process. Just ask for a list.
2. Lender qualification
Pre-qualification vs. Approval ~Your lender will be able to provide you with a dollar amount you can spend on your new home. This amount is based on the financial information you provide.
The lender has sent your file to the underwriter and based on all of this information has approved your application subject to the appraisal on the home itself. Turning in an offer to a seller with loan approval, speeds up the whole transaction process and there is not the additional worry for you as a buyer of whether or not you will qualify for the loan.
3. Looking at property
This is the fun part! You get to tell me what kind of a home you are looking and which area and a few other specifics and I get to go to work. I will pull a list of homes currently on the market based on your parameters and notify you by email, text or phone. You look through the list, pick your favorites or those that look interesting, and off we go to look at them. As you look at property, your priorities will change. Please let me know what you like and dislike about each property.
4. Writing the offer
Once we have found your property, the work begins. Together we discuss the home, its condition, what the market is doing and based on the facts provided, we structure an offer. My job is to provide you with the tools you need to make a good offer to the seller.
5. Seller’s response
This is the hard part of the transaction...We Wait! The seller has several options regarding your offer. The first and we hope the best is to accept the offer as written. They sign the offer as accepted and we smile really big and go on to opening escrow. The seller can counter the offer and make a Seller’s Counter Offer, mapping out what the seller will accept. After the seller counter’s our offer, we then have the option of accepting the counter offer or countering the offer. Two other seller options include letting the offer expire or they can reject the offer. That’s it. It’s done and over. We can rewrite the offer or go on to another property.
6. Opening Escrow and redeeming earnest money
Once the offer is accepted all the way around. We open escrow and order the preliminary title report to see if there is any items of record on the property that don’t belong there. If we have written your offer and used a promissory note, now is the time to redeem the note. In simple terms, you write a check or get a cashiers check from the bank to the title company in the amount of earnest money promised in the offer and I give you back your original promissory note (This amount is usually $1000.00+/-).
7. Seller Disclosures
Most often, the seller’s agent has provided a disclosure statement for the seller to fill out. This disclosure tells the buyer everything the seller knows about the home from the title to the sprinkler system.
NOTE: This is also a good time to put your insurance agent to work getting bids for your home owner’s insurance policy. I can provide you with a informational print out to give to your insurance agent complete with the year the home was built, the square footage of the home, roofing, etc.
8. Ordering Inspections
Inspections are always a great idea. There are several inspections you may want to have done on the home. I recommend a full home inspection. Full home inspections will let you know everything about the home from foundation to roof. A P&D inspection will point out areas in the home that may have a problem and need repair. The inspector will be looking at all water areas where moisture is prevalent. Like the kitchen and bath, around and under sinks, toilets and bathrooms. The other part of the inspection deals with invasive pests. These include but aren’t limited to wood destroying fungus, carpenter ants and termites. Inspections range in price from $225.00 for a P&D to $450.00 for a full home. We will discuss inspections and which will best fit your situation.
* Rural Properties~ Around the area there are several homes in the rural and outlying areas requiring additional attention. If it has not been done in the past two years, normally your lender will require the septic tank to be pumped and inspected, which can range from $350 to $650. Also, if the property has a well, the seller is to provide you with a clean purity and nitrate test usually at the seller's expense. You may decide to have well flow test (estimating around $200 to $400) on the well. This test will give you the gallons per minute. Most lenders have a set minimum gallon per minute, this minimum varies by lender.
The lender will order an appraisal estimating around $875 to $1275 depending on the size and location. The appraiser will look at the property, compare it to others in the area that have recently sold and in many cases, will ask some repairs be completed.
*Rural Properties, Manufactured Homes - These properties may start out at higher prices. Ask your lender for an idea of what the appraisal could cost.
Negotiating repairs from the inspections we have completed is our next task. After looking at the inspection, and discussing what repairs need to be completed, I will write an addendum to the agreement for the sellers to sign.
11. Signing, Recording and Possession!
Once the lender has sent all documents to the underwriter and the underwriter OK’s the loan, the lender will email or Fed Ex the papers to the Title and Escrow company. The escrow officer will need at least 24 hours to work up the papers and send out an estimated closing statement for us to review, plus we will schedule a time to sign. (Don’t for get photo ID, your signature will be notarized.) Once we have signed the documents, they will be overnighted back to the lender for a final review.
Almost....there! The lender will then give permission for the title company to record the deed and transfer funds to the seller. Once it’s funded and recorded the home is yours. But Wait... there is still the most important question on your mind, "When do I get keys?" Back when we made the offer, if we gave the seller a few days to move out if the home was occupied, then we need to wait until those days are up. If the home is vacant, hurray, you get immediate possession!
A few things to remember....
Have an open mind and be a little flexible....
If you need to buy a big money item like a stove or fridge and you need to charge it, wait until the home is closed and recorded. Lots of lenders will pull your credit again after you have signed and if you have charged a large amount on your credit card, you may not qualify for the loan. It would be a shame to get to the end and not be able to close....
If you have a question...Please ASK!