Home Buying 101
Buying a home can be a daunting task, but if you go into the process knowing how it should look and what to expect, it can take some of the stress away and help get you into your new home faster! Here are some tips to follow and some information that will be handy to have going into buying a home-even if it is not your first.
Before you start looking at homes or properties, you will want to get your finances in order and make sure you know exactly where you stand. A great place to start is to save up for a down payment. Some common down payment amounts are:
- 20% of home’s price-this is an ideal amount for a down payment as it allows for some extra fees to be avoided.
- 5-10% of home’s price-this range is helpful for those who do not have the full 20% of the home’s price for a down payment. This will usually require Mortgage Insurance to be paid for as well.
- 0% of home’s price-this is common for VA or USDA loans.
There are a few other actions you can take to better prepare yourself for the home buying process. These actions are:
- Get pre-approved for a home loan-this helps you know what your budget is and is a good estimate for how much you can afford.
- Check to see if you qualify for a VA or USDA loan. There are special loans that may incentivize moving to a smaller community or purchasing a home that does not need as much work done to make it livable.
- Find a real estate professional- having someone guide you through the process of purchasing a home can take away stress and help get you into the home that is perfect for you and your family. Real estate professionals have a lot of experience with the area and know the ins and outs of the market and what is available. Real estate professionals can be the most valuable resource when purchasing a new home.
Shop for a Home
Before you dive in to looking at homes online and in person, make a checklist of everything you want and need in a home. Keep this list in mind when looking at properties online or when you go to see them in person. This will help guide you to a house that is right for you and your family’s needs.
Online resources such as real estate websites and mobile apps can be helpful to take a preliminary look at houses that you are considering. If you find a home that you really love online, be sure to visit in person and take a walk through to get a better feel for the space and how your life might look if you were to live in it.
Make an Offer
When you find “The One” it is time to make an offer! Your real estate professional will put together the contract with your offer that includes your offer price and any terms that you would like to be met before moving forward with the purchase of the home. These extra terms may be:
- Estimated closing date or possession dates.
- Amount of deposit
- Inspection requirements
Before your offer is sent off to the seller’s representative, be sure to go over all details with your real estate professional so you understand the document and what it entails. You want to make sure that it encompasses everything you wish to include in your first offer. Generally, what happens after you have made the initial offer is the seller will do one of three things; accept the offer, reject it, or counter your offer with one of their own and their own terms and conditions. From this point it is about negotiating with the seller and their representative until an agreement is reached. Sometimes these negotiating phases can get complicated, which is why it is helpful to have the help of a real estate professional.
Home Inspection and Appraisal – What is the difference?
A home inspection and an appraisal are both phases of the home buying process where a professional comes in and evaluates the property. What is the difference between them and are they both necessary?
The home inspection looks at the finer details of the home and is more for the buyer’s benefit. The home inspection will bring attention to any issues with the home such as: termites, mold, foundation issues, etc. Mortgage lenders generally do not require a home inspection; however, they are highly recommended for buyer’s as they will highlight any issues the buyer will need to know about before moving forward.
The appraisal is a little broader than the home inspection and is for the mortgage lender’s benefit. This evaluation looks at the value of the property and ensures it is a good investment for the lender to finance. The appraisal is a requirement of the mortgage lenders and will be completed by a professional hired at their discretion.
Before You Close
There are several steps to take to tie up loose ends before you will be able to close on your new home. These can all be done while the inspection and appraisal are being done to save time and get you to the closing table faster.
- Completion of financing-the filling out of applications and providing necessary documentation to the mortgage lender for approval of the loan. Some documents you may need might be a valid ID, previous 2-3 years tax information, pay stubs, landlord references, employer references, etc.
- Title search-a review of the documents related to owning the property. This makes sure there are no claims against the title. It is also a good idea to buy title insurance to protect you in case of mistakes made in the records or review process.
- Final walkthrough-gives the buyer’s one last chance to look at the house and make sure everything is in the condition it was in when the original contract was signed.
Hooray! You made it to the closing table! You are about to be a homeowner, but what needs to happen before it is official and you start moving all those boxes that have been taking up every bit of extra space around your house?
You will sign a lot of paperwork, but do not worry-your real estate professional and the closing agent will be there to explain everything. Besides signing paperwork, you will pay any closing costs, fees, and taxes and then you will receive the title and copies of all the documentation related to the purchase of the property.
You did it! You bought a home! Once you get keys and a possession date, it is time to start moving in and making the place yours! That was not so bad, was it?
Still have questions about the process of buying a home? Give us a call at (580) 772-7101 and we can get you connected with one of our Realtors and they can assist with any other information you're needing!
REALOR.com Homebuyers Guide
First-Time Home Buyer Steps: A Guide on How to Buy a House