“I’ve never bought a home before and the whole process kind of makes me a little nervous.”

We hear this statement made by first time home buyers frequently.  The entire process is actually quite painless and can be a lot of fun when working with a Real Estate professional who has your best interest in mind.

The following is a step-by-step approach to understanding the home buying process:

Step 1) DETERMINE HOW MUCH HOME YOU CAN AFFORD.  You go about this by speaking with a lender (initially, on the phone) who will ask you questions about your current income and debt in order to pre-qualify you.  There is never a charge for this consultation, it takes about ten minutes and does not obligate you in any way.

Step 2) BEGIN THE HOME SEARCH.  Now that you have been pre-qualified, here’s when you tell us exactly what you’re looking for in a home (i.e. location, # of bedrooms, style of home, age of home, etc.) As your agent we will conduct an MLS search of all available properties which meet your criteria and which are in your price range.

Step 3) CHOOSING A HOME. Now that you have chosen a home we will help you to determine how much you should initially offer. We do this by researching information on recent home sales in the area. We will never advise you to offer more than fair market value.  In fact, we will always try to get you the best deal possible. Ideally, the offer will be accompanied by an “earnest money” check, which can be in varying amounts.  

Step 4) CONDUCT A HOME INSPECTION. Once we have Binding Agreement between you and the Seller, we may then have the house inspected.  You may use whomever you would like for this purpose – we can also make recommendations. Home inspections typically cost about $300.00 and are an expense incurred by you as the Buyer.  The purpose of the inspection is to reveal any defects with the property. The Home Inspector will provide an inspection report and then we may request that the Seller make any required repairs.  If the Seller refuses then you have the option of withdrawing your offer with no penalties or loss of earnest money.  You are never under obligation to buy any home that needs major repairs simply because you made an offer on it.

Step 5) THE PROCESS BEGINS. Now that all repair issues have been addressed we will submit the signed contract to the lender and the closing attorney who will do all the behind the scenes work that goes along with purchasing a home.  For instance, they order the appraisal, they order the homeowner’s insurance, they check the title and they deal with any issues regarding obtaining your loan.  At this point, you will likely be asked to meet the lender face to face in order to begin the loan paperwork.  

Step 6) MOVE INTO YOUR NEW HOME. As we approach the end of the loan process we will be given a closing date and time (typically 30-45 days after your offer has been accepted).  We all meet at the attorney’s office where numerous loan documents will be awaiting your signature.  The attorney will explain everything and answer any questions you may have.  Once everything is signed you will get the keys, garage remote control openers and a big, hearty congratulations.  You are now a homeowner.

FREQUENTLY ASKED QUESTIONS.

A)    What are “closing costs”?  

Closings costs are primarily the costs associated with financing a home (i.e. loan origination fee, process fee, recording fee, attorney's fees, etc.)


B)    Who pays the closing costs? 

Essentially, all buyers pay their own closing costs, however, rarely do you have to come out of pocket to do so.  At the very beginning we can structure your offer so that the Seller pays the closing costs from his/her proceeds.  It’s really very simple, we agree to pay him/her a certain amount for the property with the understanding that he/she will credit back to you at the closing the amount we need to cover the closing costs. The bottom line is everything can be rolled into your mortgage and paid over the entire term of the loan as opposed to you having to come up with the cash all at once.

 
C)    How do I know if there are any liens on the house I choose to buy? 

This is why we have an attorney.  The attorney does all the title work.  This means they check to make sure no liens have been recorded against the house.  If any are found then the Seller will be required to have them satisfied and removed in order to convey to you “clear” title. In addition, you may also purchase optional owner’s coverage title insurance at the time of closing.  It is a one-time premium and is normally relatively inexpensive.  This premium may be rolled into your closing costs as well.
 
D)    Why should I buy a house when it’s going to take me thirty years to pay off? 

Your loan/mortgage is typically setup to be paid over a period of thirty years (this is referred to as loan amortization). It is designed this way in an effort to keep your monthly payments affordable. It does not mean, however, that you have to keep the house for thirty years.  If after a year or five years you wish to move then we simply sell the house and pay off the loan in full with the proceeds of the sale.

E)    Why should I buy instead of continuing to rent? 

It makes greater sense to buy… Some people, due to financial circumstances, have no choice but to rent.  However, those who do have a choice and the ability to purchase, should.  Firstly, home prices are at an all time low and financing rates are still very good.  The lower the financing rate the less it will cost for you to borrow the money.  In fact these days it is not uncommon for you to have a monthly mortgage payment that is lower than your rent payment.  Secondly, when you pay rent you will never see that money again. When you pay a mortgage you are virtually placing money into savings.  As the value of the property appreciates so does your savings.  For example, a home you buy today for $80K could easily be worth $100K or more in a short period of time as overall home values appreciate.  In short, buy a house and pay your own mortgage instead of renting a house and paying the landlord’s mortgage.
 
F)    Who pays the commission? 

The Seller pays the real estate commission the majority of the time.  When a home is “listed” for sale, at that time, the Seller is agreeing to pay a commission when an acceptable offer is made on the home.