What do I need to do to buy a house? I get this a lot from prospective home buyers and it’s a great question that I wish more people would ask me! I have outlined a quick summary of the seven main steps to making your homeownership dreams come true!
Step 1: Get Pre-Qualified with a Local Lender
It is hard to start looking for a home without an idea of how much you feel comfortable paying every month for a mortgage, right? Getting with a local lender will tell you exactly what the max purchase price of the home should be and even help you determine loan types, down payments and the overall best loan options based on your current financial status. I mentioned a “local” lender because they understand the local taxes and insurance for your area. Plus, when you get in a bind, it is nice to be able to look someone in the eyes and not constantly get voicemails or passed to ten other loan processors!
This is a big one… bare with me! There is a misconception with a lot of buyers that they can just call the number on the sign in the yard. Here are the issues with that… you are calling the agent who represents the seller and won’t have your best interest at hand. It is like having an attorney represent both parties in court…it’s just not good practice! Also, you need an agent who understands your needs so THEY can be looking for you a house. Agents work with other brokers and show other company listings every day! It is not like buying a car where you can only buy from their lot. Agents have access to thousands of listings and the best part… you don’t pay them a penny! The seller compensates the agent representing the buyer! So, if the listing agent represents you as the buyer too then the listing agent just received all of the commission. Therefore, it’s a no brainer…get a good buyer’s agent to help you find your dream home!
Step 3: Find the Home of Your Dreams!
This is the fun part! Here are some things to remember: be open with your agent about what you like and don’t like about a house. They don’t own these homes, so you won’t hurt their feelings. In fact, you are helping them understand your taste which will narrow down the homes to exactly what you want. Be cautious of the sites you are searching on as they can have outdated information or one wrong click and you will have every agent in town calling you! Be sure to take notes at the houses. You will see a lot of homes and they will start to run together!
Step 4: Let the Negotiations Begin
Once you find the perfect house, your agent will advise you on fair market value of the home and offer terms. You might want to negotiate the seller pay for your closing cost or a home warranty. Again, your agent should be able to advise you during this time. You will sign the legally binding contract, you will wait for the seller to respond… it seems like an eternity, but try not to chew all of your nails off! The seller will acknowledge your offer by accepting (fingers crossed) counter offering or rejecting (hopefully not). Once you agree on terms then you are officially under contract! YAY! Fun and exciting stuff!!!
Step 5: Hire a Professional Home Inspector
This is one of the biggest financial decisions you will make, so it is very important to make sure you know what you are getting yourself into. Spend the $300 and get a professional to check every little thing out in the house. Depending on the terms of your contract, you can negotiate that the seller make some repairs based on the findings in your report. You are going to big ticket items that are deal breakers (ie: new water heater is needed or roof is leaking, etc).
Step 6: Loan Processing
Hang in there… this is a tough phase. You will literally wonder if the next thing your banker wants is a blood sample or your first born! This is when the lender will get all of your bank and work verifications done. They will put together a completed file and send everything to an underwriter who is paid to make sure they aren’t loaning money to someone who seems like they can’t pay it back! They will look very closely at your work history, bank statements, credit and current loan payments. ***It is very important that you don’t spend any money on credit during this time! I have seen buyers go to Rooms to Go and put an entire house full of furniture on their special financing program of zero interest and payments for 18 months, but it messes up the debit to income that the bank approved you on and you won’t have a house to put that nice furniture! Pinch your pennies!
Step 7: CLOSING DAY!
Hallelujah! The day has finally come where you sign your life away and get the keys to your house!!! You will want to be sure to have a final walk through with your agent to insure that the terms of the contract were fulfilled (ie: repairs were done, when they moved they didn’t beat up the walls, etc). This is such an exciting time! Be sure to take tons of pictures to remember this special day!
So there you have it… the crash course for home buying 101! I hope this was helpful to you, but if you are a detailed person and want more information or are ready to get started, then please reach out to me: Stuart Fowler, licensed agent at Gulf Coast Experts Realty Group 208 N. Greeno Road Fairhope, AL 36532. My email is firstname.lastname@example.org and my cell is 251-295-4363.