Home Buying 101: The Basics
Most people have the dream of owning a home, but there are many steps that must occur to make that dream a reality. Here you will find a basic guide on what to expect when considering purchasing a home.
Various lenders and mortgage brokers will offer different rates and fees. When you are researching a lender to provide your loan services, it is very important to talk with more than one lender, and to get multiple loan quotes. Don’t be afraid to “shop your lender” and compare. This will help you to make the most informed decision, and to choose a lender who has the best loan terms and interest rate for your particular mortgage. Your interest rate will dictate what your mortgage will cost you each month, and it will be in either fixed or adjustable terms. A person’s credit score will also determine what rate is available to them, so knowing this ahead of time will help decide if it’s the right time for you to buy. While in the financing process, you will need to lock in your rate to secure your rate for your loan. You will want to make sure your loan officer verifies rates on the day that you are going to lock, to ensure you’re getting the best rate available to you. Generally, you can secure a mortgage ranging from 15-30 years. Keep in mind, the longer your mortgage term is, the lower your payments will typically be, but over the life of the loan, you will pay more in interest. We have relationships with outstanding local lenders who provide fantastic rates and services. Contact us and we will be happy to get you in touch with a lender in the area.
Determine Your Budget:
Now that you’re pre approved to purchase your home, you need to set your budget. Even though you may be approved for a certain amount, you want to make sure that the amount you actually spend on a home fits your lifestyle and budget. Your lender should educate you on the amount you will need for your down payment, monthly expenses, home insurance, and property taxes, because all of these expenses combined factor into your total monthly payment and your “buying power.” Once you have looked at these aspects, as well as had a lender review your debt-to-income ratio and confirmed that it is within acceptable limits to purchase a home, the home buying process can begin!
Finding a Home:
Now that you’re ready to buy, the real fun begins. The most important part of this process is finding a Realtor® who can help you on your journey. Don’t be afraid to interview more than one realtor, and make sure they’re a good fit for you. A well-seasoned, trustworthy realtor will be an integral part of your home search journey, from helping you to find the right homes that fit your needs, representing your interests in the negotiation and inspection process, and doing everything they can to ensure you get to the closing table on time! As you pre-screen homes, take time to determine what your top 5 “must have” items are, what your top 5 “wish list” items are, as well as how many bedrooms, bathrooms, the amenities, and the location that you desire. We would love to make your dream of home ownership a reality! Please, contact us today to get started.
When You’re Ready To Make An Offer:
Now you’ve done your homework, toured many houses, and found the one you’re ready to make your own, it’s time to submit an offer. It is important that your Realtor® provide advice to you in this decision. Ultimately, the choice is yours, but it is important to take cues from your Realtor® who knows the in’s and outs of the negotiating process, and want to help you get the best home possible for the best price. Don’t hesitate to ask your Realtor® to run a reverse Market Analysis for you to determine the value of the home based on the market, not just what the sellers want for the property. Your Realtor® will also be able to provide you advice on obtaining other concessions in your offer, such as appliances, or having the seller contribute to closing costs or pre-paid items. Your Realtors® advice, experience, and wisdom truly is invaluable during this part of the process.
Once You’re Under Contract:
Once your agent has successfully negotiated a contract on the home that you want, and you’re officially under contract, there are several steps that occur simultaneously. These include inspections, appraisals (if financing the home), and obtaining home owners insurance.
Inspections: Inspections serve to ensure that the home you are purchasing is in the condition that you expect and are comfortable with, and that there are no serious deficiencies with the home. It is extremely important to protect yourself by getting a home inspection, it is a vital part of the home buying process. An inspector will look at the main components of the home, such as the foundation, roof, plumbing, electrical, HVAC, grading, crawl space/basement, attic and more, and ensure they are up to expected standards. Yes, there is a cost associated with an inspection, typically around $250-$450, but it is worth the extra expense to know the total condition of the investment you’re about to make. Be protected, get a home inspection.
Home Owners Insurance: There are many insurances agencies that provide this service for homeowners. Insurance agents can typically quote the policy over the phone after gathering some basic information. Once you choose the provider you’d like to ensure your home, the policy is typically added to the closing costs of the home purchase, and paid a year in advance at closing by the title company. Most lenders require that you have home owners insurance if you’re financing your new home. Be sure to call around and get quotes from various providers. There are several factors that affect the cost of the insurance policy, including the location, age, value, amenities such as a fire place or pool, etc.
Appraisal: An appraisal is typically ordered by the lender. The purpose of an appraisal is to ensure that the home is worth the value that they’re going to be lending on. An appraisal value is determined by several things, including comparing similar houses, amenities, conditions, price per square foot, upgrades, lot size, and more, in near by homes that have recently sold.
In order for the deed to be recorded, the mortgage instated, and the home to officially become your own, closing on the property at a title company or banking institution must take place. During the closing, which typically takes an hour, all documentation will be signed, fees and closing costs will be collected, and keys will be transferred. At the end of the closing, the home is now yours! Typically, possession is given to new owners at closing, unless otherwise negotiated in the negotiation process. You can now move into your brand new home and begin making a life time of memories!
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