Are you ready for that magic time of owning your first home? Are you wondering how to go about it? This is the perfect place to start! We give you step-by-step instructions on how to get into your first home!
How to start:
Helpful hints on where to start the property portion of the process:
There are definite benefits to homeownership, including:
What type of area would you prefer to live in? For example, are you interested in living in the city or an urban area? What about the suburbs or maybe something more rural?
What are the local schools like? If you have, or are planning to have, children, you’ll want to know about your local school system. You can get reports on your community’s schools from your real estate agent, we know the best agents in any the local school board, or through one of several online resources, including:
What about the neighbors, nice people? Do you want to live in a community of mostly young professionals, or families with young children, or would you like a mix of neighbors?
What about public transportation? If you use public transportation regularly to get to work or to go shopping, it’s essential that you have easy access to public transportation routes and that the routes take you to where you need to go.
What about community amenities? Are there parks, pools, libraries, etc. nearby?
What are the estimated taxes on the home? Every home listing should include information on estimated taxes for the area. You can get tax information from the homeowner, your Real Estate Agent, or from the county’s tax office.
What type of city, county, or private services does the home use? For example, does the home use city water and sewer systems? Does it have well water? Is it part of a homeowners’ association that provides trash pick-up and landscaping services?
Determining what area you wish to live in. Let’s consider what you’re looking for in a home. Ask yourself the following:
Should I have the home inspected by a professional?
Yes, no matter how closely you review the property, there are things you either wouldn’t know to look for, or wouldn’t be able to evaluate on your own. That’s where a home inspector can help out.
By law, sellers are required to disclose anything that they know is wrong with the home; you’re also protected by a home inspection clause. Having a home inspection means that a professional home inspector will come and examine the home to give you an accurate picture of the home’s condition. The report will include the home’s interior, exterior, foundation, insulation, electrical wiring, plumbing, and more. A home inspector will not comment on the value of the home, or whether or not you should consider buying the home. Their only job is to report on the condition of the home.
It’s a good idea to be there during the inspection if possible. A good inspector will show you everything he or she is looking for. It can help to know what you’ll need to replace or update, and what to be on the lookout for that might give you problems down the road. The inspector should give you a copy of the report. Depending on what the home inspection turns up, you’ll have the opportunity to possibly renegotiate the contract to offer less for the home, or require the homeowner to make specific repairs before agreeing to close on the home sale.
What about working with a real estate agent? Real estate professionals can be very helpful in the home buying process. The benefit of using us for your financing is that we work with some of the best real estate agents in the business. Check with one of our loan professionals, they know exactly who will be best suited to you’re your needs and goals.
Some of the benefits of using a real estate agent;
They have access to the Multiple Listing System (MLS). The MLS is the electronic listing of all homes being represented various agents throughout your area of interest. This helps the agent locate multiple choices for you based again on your needs and goal
They may also know about homes that are available in your area of interest that are not being actively marketed on the MLS. They can also get referrals on homes in your price range from their large network of fellow agents.
They have time to research the local market, make appointments for you to see homes…. All of the things that you might not have time to do or want to do for yourself!
They will prepare and handle all the paperwork related to the home sale.
They can help you determine how much the home is really worth based on comparable sales in the area.
They have a fiduciary responsibility to act in your best interest. They should try to negotiate the best possible deal for you.
Offers & Counteroffers
When you’ve found the home you want the next step is decide whether or not you want to make an offer, meaning that you want to tell the seller that you want to purchase the home. Making an offer is where you outline exactly how much money you’re willing to pay for the home and under what conditions.
Terms and Conditions
In addition to the sales price, your mortgage, and personal property, you’ll want to include your requests for terms and conditions of the purchase such as:
A contingency is a clause in your contract saying that if something goes wrong you are not legally bound to purchase the property.
There are two standard contingencies that most home buyers include in their contract: a financing contingency and a home inspection contingency.
Where to Begin?
If you’re using a real estate agent you’ll have help in negotiating with the sellers and filling out the paperwork. If you’re buying a home on your own the seller may have an agent that will handle the process. Remember though, the seller’s agent does not work for you he/she works for the seller and they are obligated to get the highest price possible for them.
Don’t do it alone! If you are not using an agent, it’s a good idea to have it reviewed by a real estate attorney. Whether you have an agent helping you walk through the process or not, the most important thing to know is that when it comes to making an offer on a home everything – everything – must be in writing.
Arriving at the Sales Price
How much do you offer for a home? The answer really depends on what type of a real estate market you’re in. In a hot selling market, it sometimes takes an offer over the asking price to get the home!. If it’s not such a competitive buying environment you’ll have more room to maneuver and in that case you can consider offering less than the asking price.
What affects the price?
You can and should request an assortment of tests to be run on your home prior to purchase, including a test for radon, lead-based paint, asbestos, and termites.
In addition to ordering the tests, you can also negotiate to have the seller pay a portion or all of the fees for the tests to be performed.
Earnest Money Deposit
You will have to make an earnest money deposit to show the seller that you’re serious about your offer. A seller doesn’t want to take his/her house off the market, which is what happens when they accept a contract, if he/she is not sure that you’re genuinely serious about buying the home. The amount of the deposit that you’ll be required to make varies, but is typically between 1 to 3% of the sales price.
The check will not be cashed right away. Instead it will be held by a third party (such as a title office, attorney or a real estate agent) to ensure its safety. If your contract is accepted and you purchase the house your check will be cashed and the deposit is subtracted from your down payment and/or your portion of closing costs (if any).
There are a few different scenarios if the contract falls through.
The contract should indicate who would hold the deposit and under what circumstances it will be refunded to the buyer (usually only if the financing falls through or if the seller backs out of the agreement to accept another contract).
Before Sending the Offer
Review it with your agent or professional, attorney, etc.! Once the seller accepts the contract it is legally binding.
After Making the Offer, Then What?
– This is where the negotiating begins. You know what you want; the seller knows what he/she wants; and the counter offer is best described as the middle ground everyone can or cannot agree upon.
– Once they accept or make a counter offer you will review the counter offer add any additional changes on your part or sign/initial to accept changes and send back. Theoretically this could go on forever, but usually an agreement is reached in the second or third counter offer – keep the faith!
Once you are successful you go into escrow or settlement,
This is where you and the seller “close” the deal! Closing on the property and your home loan transpires when you sign all the papers transferring ownership of the property from the seller to you!
Balance of your Down Payment
At the closing the balance of your down payment is due and payable. Remember that earnest money deposit? It will now be applied toward your down payment amount. A cashier’s check or a certified check is typically required for the down payment. Your bank will supply you with one.
The Close and Moving In
Once you finalize all documents, it’s time to move in – congratulations!
If you have any unanswered questions be sure to contact one of our loan professionals for additional advice and professional contacts.