Buying a home is an exciting time, however it is a timely process. Once we have found a home we like and negotiate with the seller; the process will take approximately 45 days to close. This page will help you get familiar with the many steps along the way.
Pre Approval: Many buyers wonder why it is such a big deal to be pre approved before they have even found a home; and there are many reasons. The first reason is the obvious, we need to make sure you can get a loan. There are many types of loans available and everyone's situation is different, so we need to see what type of loan you can get approved for. Some seller's only offer to sell their home to buyers with a particular type of loan, so it is vital we have this information. We also need to know what our purchasing power is, meaning how much are we approved for. There is no need to get our heart set on a home to fid it is not in our budget. Finally, we will need a pre approval letter to submit with our offer to purchase. The seller will want to know we are not only serious about purchasing their home but that we have the ability to purchase it as well.
Out of Pocket Expenses: While most costs associated with purchasing a home will be due at closing, there will be a few out of pocket expenses we need to be prepared for along the way. The first is the Earnest Deposit. This is a deposit we put down to show the seller we are serious about purchasing their home. Second are inspection fees. Within the first 10 days of our accepted contract we will have to do our inspections, and those fees are due at time of service. Finally, we have the appraisal fee. The appraiser's job is to assign value to the home and again is paid prior to closing.
Now that we are pre approved, the hunt is on!
MLS Search: We will be setting up a customized search in MLS to find homes currently on the market that meet our search criteria. MLS has the most up to date information and will notify us via email when any new homes are available. Any homes we want to see we can place in our favorites and those we do not like we can discard completely. This will help us stay organized along the way.
Appointment Preparation: We will need to identify the homes we want to see at least 24 hours prior to the day of our home tour. Some sellers require 24 hour notice, so we need to give them ample notice. Email us the MLS numbers and/or address; and we will get our tour coordinated.
Home Tours: At the start of every tour, you will get that days homework. This will be a detailed printout of each home we will be touring that day. It is important to take notes about each home on its printout; both likes and dislikes. After we finish looking at the home we will rate it on a scale of 1-10. Those homes we rate 7 or above; we will keep on our list and check the seller's disclosures. Those below 7 we will discard. By taking our notes and rating the homes, we will stay organized and keep the home facts straight... after we look at several homes they will all start blurring together.
2nd Showings: We have narrowed down our search and are ready to see our finalists a second time before we make our final decision. We have reviewed the disclosures and the comparable sales for the homes and will go back for a second refresher look. This will allow us to compare our the features of each finalist back to back. In a seller's market we may not have this luxury, as homes sell very quickly.
***With that being said, you should never settle if you are not satisfied. This is the biggest purchase of your life and we need to make a sound decision. If we view the finalists and you have just not found the one, then we keep looking... simple as that! Never be afraid to express your fears or concerns to your agent; that is what we are here for.
Making an Offer:
We have found the one! So what do we do now?
Hurry up and wait: From this point on everything is hurry up and wait. Everyone wants things from us in a hurry; yet it seems like we are always waiting on someone and usually are. Just relax and be patient; purchasing a home takes time and is a process.
Deciding What to Offer: There are many factors to consider when making your offer. The asking price; the comparable sales; how much we are approved for; will the seller pay closing costs; what types of updates are needed; is it a buyer or sellers market; etc. There is no cookie cutter formula, each scenario is different and will need to be evaluated. We will go over all of this information before you make your final decision.
The Paperwork: Once we have decided what we want to offer, we will prepare and sign an Offer to Purchase. This contract contains all the terms regarding the purchase of the home. Price, closing date, the responsibilities of each party, etc. After our paperwork is complete we will collect the Earnest Deposit and the offer will be sent to the seller for review.
Our Offer: The seller now has our offer to review and has several options. They can accept our offer as is; they can reject our offer; they can ignore our offer; they can make a counter offer. If the seller accepts our offer; we are now under contract. If the seller rejects or ignores our offer, we can submit a new offer. Or the seller can make a counter offer.
Counter Offer: If the seller makes a counter offer, we have the same options the seller had when reviewing our offer. We can accept the counter offer. We can reject the counter off. Or we can counter back. This will go on until both parties reach an agreement or decide to go their separate ways.
We have a contract, what happens now?
Earnest Money: The earnest money will be deposited at the Title Company or with the seller's agent. The earnest deposit is refundable at certain points during the process if you decide not to buy the home. For example if you find that the home has a major defect during your inspection period, you can cancel the contract and your deposit is refunded. However, if a few days before closing you get cold feet and decide not to buy the home you could lose your deposit. We will go over all of this in detail when we sign our offer to purchase and we will remind you along the way.
Inspections: We will have 10 days to conduct any and all inspections. These include a whole house inspection; termite inspection, survey, radon test, and the list goes on. We pay these inspector's to find any and all defects they can possibly find, so don't be alarmed if we get 7 pages of items needing attention. This does not mean the home is falling apart, many of the items will be duplicates, preventative maintenance or there because the home was built prior to that item being a building code.
Once we have completed our inspections, we have decisions to make. We can find the home acceptable and move forward with the purchase. We can find the home unacceptable, cancel the contract and get our earnest deposit back. Or we can ask the seller to fix the items or lower the price. The seller then has the option to repair all, none or part of what we ask to be repaired/replaced.
Title Work: The title work will be ordered to ensure we are purchasing a home with a clear title. And our closing will be scheduled.
Lender: The contract will be sent to the lender so the lender is able to order the appraisal and start the underwriting process. You will be asked for several items throughout the process and we do mean several. Just when you think you have given your loan officer everything possible...they will ask for one more thing. Keep in mind lenders are loaning thousands of dollars to someone they have never met and they have guidelines to follow. Don't take it person; just grin and bear it and get your loan officer the information they ask for.
Appraisal: The appraisal is completed to determine the value of the home. We want to make sure we are not paying too much for a home. If the appraised value comes in over the purchase price, we have instant equity. If the appraised value comes in under the sales price then we have a problem.... no one wants to pay more for something than it is deemed to be worth. If this happens, we can cancel the contract, get our deposit back and find another home; or we can ask the seller to reduce the price. The other option is to pay the difference but again why would we pay more for a home than it's worth. The appraisal is normally the item that takes the longest to complete and is a big factor in determining how soon we can close.
Insurance: You can chose the company who will provide the insurance coverage on your new home. So you will want to call around to see who can offer you the policy that best meets your needs. Be sure to have them quote your vehicles as well, so you can get the multi-policy discount. Once you have chosen an insurance company send your loan officer the agents name and number.
Utilities: The utility company information can be found on the seller's disclosures. Call and have the utilities put in your name for the day of closing.
Clear to Close: If you are getting a loan to purchase your new home; these are the words you want to hear. This means the lender has all of the information they need; everything looks ok; and our loan is 100% approved. The lender will prepare our loan documents and send them to the title company for closing day. Keep in mind the lender will verify employment and reverify credit accounts at closing so do not change anything.
Final Walkthrough: We will meet the day before closing to do our final walkthrough. We want to make sure the home is in the same condition as it was when we agreed to purchase it.
We made it! Today is the day we actually purchase our new home; so get ready to sign, sign and sign some more!
Who attends the closing? The borrower, their spouse and any co-signers. The closer from the title company will direct the closing and notarize the documents. And of course we will be right there with you!
What items will I need at closing? You will need a picture ID and your funds to purchase your new home. Typically if you owe less than $500 you may write a personal check. However, any amount over $500 requires a cashier's check. Our loan officer can give us an estimate of what we will need, but our closer at the title company will give us our exact figure right before closing.
How long does closing take? Our closing will normally take no more than an hour.
When do I get the keys? Normally you will receive the keys to your new home at closing unless otherwise specified. Some seller's do not want a buyer to have the keys until they get paid (this is called funding); this will be determined in your contract.
Post Closing Tips
- You will receive a copy of everything we signed from the title company and a copy of the appraisal from our lender. About two weeks after closing you will receive a copy of your official deed. Keep all of this information together in a safe place.
- Your deed is recorded at the county and is part of public record. This will trigger a lot....A LOT!!!... of junk mail. Read it all carefully and if someone is asking you for money it is probably junk! Unless it's your house payment or utilities, question it all. And call your agent, loan officer or title company to se if it's legit.
- By making one extra payment per year, you can pay off a 30 year loan in about 23 years. Be sure if you make extra payments that you specify those funds go directly to principle.