Buying a new home can seem like an overwhelming experience for many first time (as well as seasoned) homebuyers. It may seem like there are so many things to remember and so many things to do, and can seem daunting for some. It helps to to have a great agent to help you through the process, and it certainly helps to be able to break it down step by step and just concentrate on each individual portion at a time, as you march down the path on your journey toward home ownership!
Here is how the Dept. Of Housing and Urban Development (HUD) breaks down the home buying process in nine steps. The link to the source of the info can be found at the bottom of the post.
Step 1: Figure out How Much You Can Afford
Talk to a lender or a good mortgage broker, and they can run your credit score and see how much of a loan you would qualify for, based on your income, credit score, employment, etc.. It is definitely a good idea to do this up front, so that you know your exact purchasing power and the price range in which you should be seriously concentrating your house hunting efforts. Also, most all seller’s entertaining offers on property they are selling these days will require that a pre-approval letter be included with any offer coming in to them. Best to start here, and possibly save yourself wasted time and effort in the future.
Step 2: Be Aware of your Rights!
Familiarize yourself with the Fair Housing Act
http://www.hud.gov/offices/fheo/FHLaws/FairHousingJan2002.pdf
and the Real Estate Settlement Procedures Act (RESPA):
http://www.hud.gov/offices/hsg/ramh/res/respa_hm.cfm
Both are designed to protect borrowers and buyers in the homebuying process – it is highly recommended for all borrowers to familiarize themselves with the provisions, so you KNOW YOUR RIGHTS!
Step 3: Shop for a Loan
Now that you know you are pre-qualified and are ready to do some serious looking, devote some of your serious attention to shopping for a good loan in addition to the time spent looking for your new home. If you do your homework, comparing costs with several lenders and looking at the different costs and interest rates may save you serious dollars over the life of the loan.
Step 4: Learn About Homebuying Programs
Downpayment assistance is available if you qualify! – you can find information on some of California’s programs here: http://www.hud.gov/local/ca/homeownership/buyingprgms.cfm .
Contact me at john.barry@coldwellbanker.com for more information about specific programs available in your area.
Step 5: Shop for a Home
This is the fun part!! (Or it can be the most frustrating part!) Remember that it is not easy to find a home with EXACTLY 100% of what you are looking for. If you find a property with 80% of the features you are looking for in a home, it might be the one for you & you seriously consider making an offer, especially if the amenities or features it is missing is something that can be added later on. Choose an agent you like and trust who can help you and guide you through the process from searching for the home to moving day!
Step 6: Make an Offer
This is where your real estate agents expertise and knowledge of the market conditions will help them advise you of what would be a fair price to offer on a property, to help give you the highest possibility of getting your offer accepted. Sellers do not necessarily look at the highest dollar offer as the strongest offer. When buyers are in a multiple offer situation for the same property, there are other things that sellers look for in an offer besides the final price, when deciding which to accept. A good agent can assist you in presenting the strongest offer possible which would give you the greatest chance as a buyer of having it accepted.
Step 7: Get a Home Inspection
Now that you have found a home you love and have an accepted offer (lucky you!), you are ready to schedule a home inspection. This should be done as soon as possible as soon as you have an accepted deal. Any property you purchase should be contingent upon the buyer being able to obtain and approve of a physical inspection of the property. By spending a few hundred dollars up front, a potential buyer can find out about the condition of the home, and discover any minor or major repairs needed on the home before committing to the purchase. If the potential buyer discovers any serious issues with the condition of the property at this point, they can then go back to the seller and ask for a credit at the close of escrow based upon the estimated cost of the repairs, or decide to cancel their purchase of the property based upon the inspection contingency. Again, a good agent will be able to help you & guide you through this process. Contact me at john.barry@coldwellbanker.com for personal assistance, or if you would like a referral to a qualified agent in your local area.
Step 8: Shop for Homeowners Insurance
All lenders will require homeowners insurance, so be sure to shop around for the best deal possible. Not all insurance companies may offer you the same rate.
The US Govt.’s Insurance Information Institute (iii) has some great information on 12 ways to lower your home insurance costs, which can be found here: http://www.pueblo.gsa.gov/cic_text/housing/12ways/12ways.htm
Step 9: Sign Loan Documents
You’re almost there!! One of the final steps before closing is to sign loan documents – be sure to read everything before you sign! Some helpful information on settlement costs and other as[pects of the loan process can be found here: http://www.hud.gov/offices/hsg/ramh/res/stcosts.pdf
Usually you will be required to go into the escrow office to sign the loan documents where a notary will notarize the applicable ones. Sometimes it is possible for the escrow company to arrange a mobile notary to meet the borrowers and have them signed outside of the escrow office (although this is not always allowed by the lender and the borrower will also usually pay several hundred dollars extra for this service). Once the loan documents have been signed and returned to the lender, and once everything else is in place and the buyer has deposited their final down payment, the lender funds the loan, and the escrow officer sets up the file for closing.
The next biggest decision you will have to make is what to serve your guests at the housewarming party!!!
Source of information: US Department of Housing and Urban Development (HUD) - http://www.hud.gov/buying/index.cfm
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