Welcome Back Readers! Ok, so you’ve decided to buy a house. What do you need to do? How does the process work? I’m going to give you a simple 10 step approach to buying a home “the right way”.
- Choose an agent – There is no question about it, you should not attempt buying a home without the help of a Realtor, the process is too complicated. But picking the first one you meet or just using whoever was at the open house you dropped into might not be right for you. Ask your friends and family if they know of any agents you should interview. Look at the areas you want to purchase in and see which agents are selling homes there already. Go search online, review their websites and blogs. Then go meet with them, ask them about the process, see what services they offer, how they do business, and then select who you are going to work with. Picking the agent before picking the home ensures you will have a committed, competent professional working for you, helping you make the right choice for your future.
- Before you look at houses, sit down with your agent. I know, I know, you’re excited, you want to go look, but it is crucial that you are prepared when you find that dream house. Here’s what you’ll do:
- Come up with a list of needs and wants. What can’t you live without? What do you really need? What is just “nice to have” but not a deal breaker.
- You need to work out the numbers. Decide how much you want to spend. Work out your budget and set a strict number that allows you to afford a mortgage but still live your life. You don’t want to be “house poor”.
- Also, work out how much cash you will need for an earnest deposit, down payment (different than the earnest deposit) and closing costs. Your agent will help you with this.
- Read the contract. Understand it. Ask your agent to explain what a home purchase contract entails and how you will fill it out. What are your options, what can you ask for, how does the process work?
- Sit down with a lender and get pre-approved for a mortgage. Yes, a real, sit down appointment, where you provide paystubs, W-2s, bank statements, etc. Doing this upfront will help you avoid nasty surprises that can kill your dream home purchase. Review your credit report with the lender and correct any negative items. Knowing which financing program you will use (FHA, VA, Conventional, USDA, etc) is critical in knowing how much you can afford. Your agent will help you pick a competent, local lender. Stay away from out of area or online lenders; they won’t give you the best service and rates/fees. Also, ignore those online mortgage calculators, they don’t take things like taxes and insurance into account and don’t give accurate numbers. Make sure your agent knows the lender you have chosen has a good track record of delivering their promises on time. I have seen many buyers lose their dream house when their cousin Larry the Lender couldn’t deliver at the closing table.
- Now, go look at houses! Pick out the homes with the help of your agent. Take along a notepad and a digital camera so you can remember details about each home and don’t look at more than 5 at a time, you’ll have a tough time remembering all the details if you look at too many houses.
- Stay within your budget. If you are not finding houses you like in the price range you can afford, you probably need to accept the reality that you are going to have to “settle”. Think of it like a stepping stone, if you can’t afford your dream home now, find one that you’ll be happy in for the next 5-10 years and then when the time is right you can buy that dream home.
- Write an offer. Your agent will advise you on what to do. Avoid lowball offers on a house you love, as you may just irritate the seller enough to make the negotiations hard. If the home is overpriced, offer market value. If it is priced at market value offer market value. Keep your eye on the prize, sometimes you get the house you love, sometimes you get a “deal”, you rarely get both.
- Do Inspections. It will cost between $300-$500 to do a whole house and termite inspection, you also have to option of radon, well and septic inspections at additional cost. Avoiding an inspection to “save the money” will only cost you much more money in the future. A whole house inspection is money well spent.
- Get a good home owners insurance policy. Don’t just get the cheapest coverage, ask about coverage details and limitations, compare deductibles and providers. Many times you can get sizable discounts by combining your auto and homeowners insurance policies with one insurer, so ask about this as well.
- After you have an agreement, watch your credit carefully. DO NOT go out and buy a new car, new furniture or take on a new loan of any kind, This will affect your “qualification ratios” and you may end up being unable to afford that home you love. Also, avoid lender shopping at this stage, you should have already done that and last minute lender will just screw up your deal. Do what the lender tells you to do as soon as they ask for it, lending regulations are complicated and if you don’t get the lender the paperwork they need on time they can’t close your loan on time.
- Go to settlement! This is the big day, show up with a cashiers check for the money you need to bring to closing, bring a photo ID and be ready to spend about 45 minutes to an hour signing papers. After that, the keys will be in your hand and the home is yours!
This is a bit of a simplified list, there are lots more minor details to be addressed and every one of them counts, but your Realtor will take care of many of them for you. Good luck and Happy House Hunting!
As always, I’d like you to be part of the conversation, so if you like what you read here please comment, forward this post to your friends and subscribe!
If you have questions, need real estate advice or want to buy or sell a home, you can call or text me at 717-371-0557, email me at Jason@JasonsHomes.com or contact me at the office at 717-490-8999!
Your Friend in Real Estate,
Weichert, Realtors – Engle & Hambright