Sometimes the excitement of searching for a new home gets the best of homebuyers. Quite often, we get the call from someone wanting to view several homes, but there is a step that is necessary before ever stepping foot into a home that is for sale...The Pre-Approval. Imagine finding the perfect house, only to find out that someone else beat you to it on the same day, because they were able to provide a pre-approval letter with their offer and you weren't. The seller will feel more secure with an offer that shows that you are a qualified buyer, plus you have the benefit of knowing that you are shopping for a home that you will qualify for. You don't want to find the perfect dream home and then discover that it is out of the range that a lender will provide to you for a mortgage. So, how is this accomplished? What are the proper steps for making a home purchase? Well, you asked, and now you shall receive the answer!
Here are 10 Steps to Home Ownership
1) Make sure that you are truly ready to buy. Buying a home is a big step, but you have to make sure that your life is in order and at a point where purchasing a home is the right thing to do. Forget what family and friends are saying or doing. This is your life, and no one knows better whether you are truly ready. Consider your current and future employment as well as whether you have the necessary funds to make a purchase of a home. Family and friends may mean well, but speak with professionals that can help you determine whether it is your time to buy.
2) Find a Realtor to help you. A Realtor is one of the individuals that can help you determine whether the time is right for you to purchase a home. Realtors can discuss your current and future plans as well as determine if you are in a position to truly purchase a home, and help you find the perfect home for you. Buying a home is a complex matter, and a Realtor can explain the process and programs that will help you find your new home.
3) Get a Loan Pre-Approval. Another professional that can help you determine whether you are on course for a home purchase is a mortgage lender. You don't go grocery shopping or clothes shopping without knowing how much money is in your account, and the same holds true for a home purchase. Before ever stepping foot into a home that is for sale, you need to have a lender provide you with a pre-approval. The process is easy and it will provide you with the peace of mind that you are truly eligible to purchase a home. It also provides you with an idea of home prices that are within your comfort zone for payment. You don't want to be looking at $120,000 homes if $100,000 is your max for a purchase, nor do you want to be looking at homes that will require you to pay $1,000 per month when $800 is your comfort zone. This is where the pre-approval helps. It gives you an idea of what price range you need to stay within during your search, and it provides you with a letter to provide to the seller when you decide to make an offer on their home. A seller will most likely not accept an offer from a buyer unless they know that the buyer has been pre-approved.
4) Let's go Shopping!! Once you have that pre-approval in place, your Realtor by your side, and know that now is the time to buy; it is time to find a home. Your Realtor will be able to help provide you with homes that match your interests, as well as help you find the homes that match your financing terms. Some homebuyers will look at as many as 20-30 homes before finding their perfect homes, while some may only see 5-6. Only you truly know when you have found your dream home. So, get to know your Realtor, because you could be spending a lot of time together.
5) We Found It!! You have finally found the perfect home for you. It may have taken you months to do so, but there it is! It matches what you want in a home, the price and location is right, and overall...it just feels like home. Now, the butterflies start to fill your stomach. Now what? Are you truly ready to say, "This is the one?" Thoroughly discuss it with your Realtor to make sure that you have all of the necessary information.
6) Share your excitement with your lender. Although everything points to this being the perfect home for you, there is still the matter of financing. Every area has its own millage rates that effect overall payment, so homes priced the same won't necessarily have the same payment depending upon their location. So, now is the time to share your find with your lender to have them provide you with your actual home payment on the home that you have chosen.
7) We'll Take It! Not so fast. There is still the matter of discussing with your Realtor how to structure the offer. There are numerous ways to structure an offer on the home, and your Realtor and Lender will assist you in determining the best way for you. Dependent upon the individual buyer, you may need assistance with closing costs and pre-paids, need down payment assistance, or any other number of stipulations placed in the offer. So, now is the time to sit down with your Realtor and discuss how the offer needs to be structured. Your Realtor will take into account the advice of your lender, and between the three of you; determine the best way to structure your offer to suit your needs.
8) Accepted! Great...now what? First, get inspections completed on the house. You don't want to spend thousands of dollars on a home only to find out that you also have thousands in unexpected repairs. Have a professional home inspector check the home from top to bottom, so that you have peace of mind that the home that you are purchasing does not have any hidden issues. Once the inspection has met with your approval, contact your insurance agent to get a quote on your coverage for your new home.
9) Closing time. The time between getting your inspections and insurance, and the closing is a time that typically the buyer and seller has to do very little. During this phase, the agents, lenders and title company are completing all of the paperwork to get everyone to the closing table. You will be updated along the way as the process is being completed, and this provides you with the time that you need to pack and plan for moving. Your Realtor will provide you with the necessary information regarding utilities, and will provide you the opportunity to do a final walk-thru prior to closing.
10) Welcome Home! You did it! You have become a homeowner. However, the work is not over. You still have to move in. Call your friends and relatives and tell them that it's moving time. They can help you clean, paint, and move the boxes and furniture that truly make it your home. Once done...enjoy your home! Welcome to the world of home ownership!