Nine Steps to Purchase a Home
Step - 1 Make the Decision to Buy
It seems obvious, but it's good to note that the first step to buying a house is making the decision to buy. Consider the reasons you want a new house and write them down. Determine how long you want to live in the new house - does buying still make good financial sense? Can you afford a house that will meet your list of requirements? A good rule of thumb is your mortgage payment should not exceed 1/3 of your net monthly income.
Step 2 - Seek Professional Guidance
A good realtor will want to schedule a time to meet with you to hear the reasons you want to buy a house and your plans for the future. They will talk about neighborhoods, schools, economic factors liable to affect the market today and tomorrow, as well as how you would like your house and neighborhood to grow with you. At this time, the realtor also helps you get pre-qualified for a mortgage loan. Pre-qualification is a written statement from a loan officer indicating his or her opinion that you will be approved for a mortgage loan up to a certain amount. The fact that you are pre-qualified will help realtors when realtors are negotiating the deal.
Step 3 - Begin the Hunt
After your initial meeting, your realtor will search all their resources for houses on the market that fit your criteria. They will preview these houses to eliminate the duds. Then, your realtor will schedule appointments to tour the houses at times convenient to you.
As we tour houses, they will point out positive features and negative features. They'll ask you to tell them what you like and what you don't like. You'll probably amend your "wish list" as you tour houses, some things will become more important and others less important. With this new information, your realtor refine our search criteria to narrow in on the house of your dreams.
Step 4 - Know the Market
Your realtor has knowledge of the local market which is an essential factor in the house search. They'll let you know when the market in a particular neighborhood is "hot" and requires immediate action or when the market is "cool" and allows for thoughtful consideration.
As you tour houses, they'll let you know when the asking price has negotiating room and when the house is "priced to sell". The realtors unique market knowledge will keep you a step ahead of the "house hunting competition".
In a "seller's market." It is not unusual to see multiple offers on a property, full-price offers and even above-price offers. On the flip side, during a "buyer's market" there are more houses for sale than buyers. This gives us more negotiating room as houses are taking longer to sell.
Step 5 - Find Your Dream House
Remember that the home you purchase may not have all of the wants that you want when finding your dream house. The realtor will put forth their best effort to find the home that you will definitely want to live in. When we do, they'll put together the purchase offer tailored for your needs including appropriate contingencies (such as obtaining financing, favorable home inspection, clear title, etc.).
The offer is normally presented with "earnest money." This is a usually an amount that you may want to write a check made to a home seller to secure an offer to buy the property. The amount is applied to closing costs. If the seller accepts the offer, generally closing is held 30 to 60 days from the offer date (generally dependent on the turn around time of your mortgage financing).
Please remember, that if you decide that you do not want to continue with the purchase process after the contract has been signed by both parties, this EMD (Earnest Money Down) check goes to the seller.
Step 6 - Negotiate the Deal
It is not uncommon to receive a counter offer when the initial purchase offer is submitted. Don't let this discourage you. You realtor will discuss the counter offer and decide whether or not to accept the counter offer, submit your counter offer, or reject the counter offer and move on. Market conditions will play a role in how aggressively your realtor negotiates the deal. They will also work within your limits. Emotions can lead to buyer's remorse. It is better to set limits prior to negotiating an offer and stick to these limits. Why? Once the contract is signed by both parties, you forfeit the "EMD."
Step 7 - Get a Loan
During the closing period, you will be working with your mortgage lender to close the loan. Since you pre-qualified for the loan before starting your home search, you will be that much closer to the end. Your realtor will gather the necessary property information your lender will need to close the loan.
Step 8 - Close the Deal
You will receive a "Good Faith Estimate" of closing costs at the time the loan application is submitted to the lender. The estimate is based on the loan officer's past experience and may not include all the closing costs. Your realtor will be glad to review the "Good Faith Estimate," answering questions and highlighting missing costs and estimates your realtor believes to be low.
Step 9 - Move In
Congratulations! It's time to move into your new house and make it your home. Enjoy this exciting time. Your realtor will give you a checklist to help you remember the numerous details that will make your moving day a pleasure.
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