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A Step By Step Look at Home Buying
Some real estate laws and customs differ depending on where you live, but there are many home buying steps that are standard, even though they might not be accomplished in the same order in every location.
Here are the 11 steps to buying a home.
Step 1, Get Your Credit/Finances in Order
Your credit reports is a primary factor in determining what interest rate you will receive and how much the banks are willing to loan you toward the purchase of the property. Know your financial history before you apply for a mortgage, as errors on credit reports are common and often require a lot of time to clear up.
Step 2, Get Familiar with the Mortgage Industry
Have at least a bit of background about the loan process before you talk to a lender.
Step 3, Get Pre-Approved for a Mortgage
Once your credit/finances are in check, apply for a pre-approved mortgage to establish how much house you can afford.
Step 4, Determine Your Wants and Needs
Grab a piece of paper and divide it into three columns. If you'll have a co-owner, have that person make a list too, but don't share ideas just yet.
Step 5, Select a Realtor
Basically, there are many Realtors, all adhere to the professional standards or code of ethics established by the National Association of Realtors, but here are some reasons of what you should look for in an Realtor.
· Find a Realtor that you feel comfortable with in their personality, professionalism and ability to serve or assist you in your home buying/selling process.
· Find a Realtor who has a good website that provides you with ample educational resources, information about the area, offers services and has a good MLS search and information on listings you are interested in
· Find a Realtor who will offer you prompt professional service
· Find a Realtor who is knowledgeable and will help guide you through the real estate process
· Make an appointment and talk with the Realtor, ask about marketing tactics, placement in MLS, services offered, commission rate, etc.
· Get a feel for knowledge and experience of the industry, the area and more.
Step 6, Start Searching for a Home
A Realtor has many tools at their disposal to help you through the process. They can help you by searching the multiple listing service (MLS) system to find listings that match your desired criteria, providing you with Comparative Market Analysis (CMA) reports, lend my knowledge of the area, school systems and more.
Step 7, Handle Pre-Offer Tasks
Deciding whether or not you want to buy a house involves a look at its structure and its features, but there are many other topics that are every bit as important to your purchase.
Step 8, Make an Offer
There are many ideas on how you can get the best deal when it’s time to make an offer on a home. No matter what your strategy is, you should have a very good idea of the home's market value before you make an offer.
Step 9, Home Inspections and Other Tests
In some states, home inspections are accomplished before the final purchase contract is signed. In other states, inspections take place after an offer is finalized. No matter when you do them, it's critical to decide which inspections and tests you want to perform.
Talk with your Realtor to find out when inspections should be handled and if additional types of testing are important for your specific area.
Step 10, Avoiding and Correcting Last Minute Problems
As your closing date nears, your Realtor can check the progress on a daily basis, because staying on top of things means you'll know immediately if there's a problem that must be dealt with.
Step 11, You're on the Way to Closing
Most of your home buying problems are behind you now and you're on your way to closing, also called settlement, the event that transfers ownership of the property to you, here the Realtor will help guide you to your new home. |
10 things not to do
1. Don't Make a Major Purchase
If you are depending on a mortgage to move in, don’t make any major purchases until after the closing on the home . An increase in your debt to income ratio reduces the amount of monthly income available for your mortgage payment.
2. Don't Change Jobs Unless It's Necessary
Lenders like to see a consistent job history. They aren't usually as nervous if you change jobs within the same field, but it's better to stay put until the keys to the house are in your hand.
3. Don't Let Your Emotions Take Over
Be realistic. No home is perfect, especially older homes. If the seller refuses to do a small repair, don’t let it kill the deal on a home you truly love, realize It's not unusual for new owners to take care of some repairs themselves. Keep a cool head during the entire home buying process, especially during and after an inspection.
5. Don't Forget to Switch Utilities
Call the utility companies as soon as you have a contract. Find out how many days lead time they need to switch the service, then get back with them when you have a firm closing date.
6. Line Up Your Hazard Insurance
Acquire hazard insurance as early as possible, as it’s another often-forgotten task that buyers scramble to take care of at the last minute. Lenders will ask to see an insurance binder showing you have coverage at the closing.
7. Don't Become Best Friends with the Seller
While it's great to be friendly, don't get into too many long discussions with the sellers, because it could cloud your judgments.
8. Don't Panic if the Appraisal Comes in Low
At least not at first. There are some things you (and your agent) can do to correct the problem.
9. Don't Go It Alone
Us a Realtor to track many of the day to day details that involve the lender, the seller, and other details.
10. Don't Ignore Lender Requirements
Know what is expected of you and take care of it. For instance, a Certificate of Eligibility is required to move forward on a VA loan. That's something you must handle yourself. Answer lender questions and provide required paperwork as quickly as possible--your closing depends on it.
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Advice for 1st Time Home Buyers
Even for experienced home buyers, it can be a confusing process, but can be especially intimidating for the 1st Time Home Buyer, so here are some tips to help guide you through the process
Get Prepped in Home Buying Basics
Talk to a Realtor for advice about the typical home buying scenario. This provides a good opportunity for you to gain some knowledge off of an expert who deals with these transactions on a continuous basis and allows you to get a feel for them as your potential agent when you are ready to make that decision.
Home Buying Questions to Ask
1. Will the Realtor help you compose your offer to purchase a home? If not, who does help?
2. What types of disclosures are sellers in your area required to give to buyers? Can the Realtor give you a sample copy of typical disclosures?
3. What types of home inspections are standard in your area? Are there other inspections that the Realtor recommends?
How much do the inspections usually cost? Are they regarded as a buyer expense?
When are inspections done?
4. Is a survey required for most transactions? If so, who typically pays for it, the buyer or the seller?
5. Does an attorney or title company do a title search to verify that the deed is problem free? What's the average cost for that service?
6. Who acts as settlement agent, the person who puts together final paperwork for you to sign? (attorney, title company personnel, real estate broker, other)?
7. Other than loan costs, what's the average total cost for other closing fees?
Taxes, settlement agent fees, etc.
8. How long does it usually take to close on a home once an offer is accepted?
That's a good start. After you have the answers to those questions, you'll have a better feeling for the basic customs in your area.
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Understanding Your Local Real Estate Market
It's important to study your local real estate market before you seriously look at houses so that you can make educated decisions through out the process.
A Realtor can get you a report of sold comparables and can look at what current listings are being priced at to reveal the mindset of sellers in your market.
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