Buying a new house is an exciting time. As we look through countless pictures of homes and collect decorating ideas off Pinterest, we often forget how intricate the home buying process really is. In a lot of people’s minds, it’s as simple as choosing a home and signing a few papers. However, buying a home requires a lot of decision making, from figuring out how much you can afford to making offers. During this process, questions will undoubtedly rise, which is why we want to get you prepared early – so you have an easier time moving in. Below are some common questions buyers typically ask, and their corresponding answers:
What is the first step?
Before you get serious about touring homes, you need to get pre-approved for a mortgage first. Talk to a mortgage lender and go over your finances. During that meeting, the lender will provide you a written statement detailing a loan amount you qualify for. Essentially, it gives you a perspective of how much you can afford (when buying a house) and helps narrow down your home search to properties a lender will help finance. This way, you don’t overshoot your budget and stress your finances.
Why should I get pre-approved?
As mentioned above, it puts you in perspective for how much you can afford. We all want that $800,000 house that features a heated swimming pool and luxurious master suite, but some of us might not have the finances to afford it. Getting pre-approved allows you to avoid making this purchase mistake. In addition, when making an offer on a house, a seller will want to know you are qualified to buy their house already. The last thing they want is to go through the closing phase, only to have the deal broken off because a mortgage lender won’t finance the purchase for you.
When I find a home, what is the typical time from contract acceptance to closing?
Regular sales and foreclosures typically take about 30 days to close on their contracts. Purchasing a short sale property could take more than 2 months, as there is additional paperwork to file and complete.
What should I look for in a home?
Everyone’s tastes are different and certain amenities take priority; however, if you are buying a home you plan to sell in the future, there are certain things you should look for. To start, consider the “perception” of the area. Is the property’s location a place where buyers will want to move to in the future? Typically, homes near great schools or are convenient to many workplaces stand a stronger chance of selling for a higher value. Also, consider any future plans of growth in the area (that could impact the sale of the house).
How much can I afford?
Getting pre-approved for a mortgage loan is the first step to gauging how much you can afford. However, it doesn’t always reflect how much you can truly afford. Other costs need to be factored in to determine the property’s affordability. Items like taxes, utility bills, HOA fees, and closing costs need to stay fresh in your mind. Yes, you’re able to secure a loan for a $200,000 home, but when you have to put down a 20% down payment and pay the closing fees (which can be several thousand dollars), your finances might be a little tight for a while. In addition, high taxes and utility costs could really dampen your bank account. Keep this in mind when determining how much you can really afford.
Found a Home. Next Steps.
How much should I offer when I’ve decided to buy a home?
Finding the right offer means taking into account a set of variables. For example, how long has the home been on the market for and what are the seller’s motivations for selling? The best indicator to making a good offer is research. Talk with your agent and see what homes have been selling for compared to his. Factor in any renovations you might need to do or home repairs that need to be settled. The best advice is to take the advice of your agent. They will know the real estate market to its smallest detail. Consult with them and see if it’s within your budget.
What do I need to make an offer?
For any offer to be taken seriously, you need to include your pre-approval letter and evidence of an earnest money deposit. Sellers want to see that you can afford their property. If you are paying cash, you will need to provide proof of those funds as well.
What should I do if the seller makes a counteroffer?
Negotiations naturally happen with real estate. One party wants something in particular while the other party wants something different. If a seller makes a counteroffer to yours, you can either accept it or make another counteroffer in return. It’s best to consult your agent during this process, as they will have experience in these types of transactions. The most important part during this phase is to remain calm and don’t let your emotions sway you too much.
What happens when we’ve settled on a deal for the home and the closing phase starts?
To begin with, you will hire a home inspector to inspect the property. He will make sure there are no flaws or damages to the property that could affect your purchase. In addition, the mortgage company will hire an appraiser to gauge on the home’s value. They do this to make sure they aren’t financing a home for an inflated price, and just in case you default on your loan.
During the closing phase, you and your agent will meet with the title company to officially change the title of the house to your name. There will be a stack of papers to sign, and you’ll receive a brief explanation of each document (as well as receive copies). Once you’ve handed over the down payment and paid the closing costs, the home is yours.
For More Information
If you’d like more information about the home buying process, be sure to download our free eBook, Your Comprehensive Home Buying Guide: