WGSF Newswire: 10 Steps to Buying a Home
These days, buying a home may not be as easy as 1, 2, 3—but it just might be as easy as 1–10. And while a variety of factors can affect the ease and timing of your transaction – distressed properties or special mortgage programs, for instance – a few basic steps are universal for most homebuyers during the initial stages of a purchase.
1. Determine your readiness: If you’re reading this, it’s likely that you’ve already tackled the first step of deciding whether purchasing is a good option for your finances and your family. Obviously, your current financial situation will be a major factor in this decision. Understanding the costs of home buying and homeownership are vital steps in determining whether you’re ready to “take the plunge.” Factors that determine your financial readiness include your current income, savings, fixed expenses, and debts.
2. Become optimal mortgage candidates: With lender requirements stricter than ever, you’ll need to make sure your credit and finances are in excellent condition. Try to pay off or pay down outstanding balances on credit cards, car loans, etc. This will help improve your income-to-debt ratio, which will in turn improve your credit score. A credit score higher than 700 will help you get the best rates. We can help you order a free credit report and challenge questionable listing on your credit report under the Consultation and Letter writing benefits of your membership for no extra charge.
3. Get a pre-approval letter: Getting pre-approved for a mortgage means that a loan officer has reviewed your finances and credit report and believes you qualify for a specific loan amount for one or more mortgage programs. The lender will then offer you a pre-approval letter, which will give you an edge with sellers when you are ready to make an offer on a home.
4. Determine your budget: Your pre-approval letter will tell you how much the bank is willing to lend you based on your credit, income, and other factors, but how much you can really afford is a personal decision. The bank will take your fixed expenses into consideration when determining your pre-approval amount, but you will need to determine what you’re comfortable spending each month.
5. Find a real estate agent: With access to multiple listing services and insight into the market, a real estate agent can help you find the home you’re looking for as well as facilitate the negotiating and closing process. While you don’t have to use an agent to purchase a home, it can make the entire process much easier for first-time homebuyers.
6. Select a property: With your real estate agent (or without), narrow available properties by determining what you really want in a home. Your agent will help arrange home viewings for properties that suit your preferences. Once you’ve selected the right home for you and your family, it’s time to make an offer and close the transaction.
7. Make an offer: This is generally done by presenting the seller with a proposed sales contract, or purchase agreement. This contract will outline the details of the sale, negotiated repairs to be made prior to close, fixtures sold with the house, certain disclosures on the property, etc. This, along with a payment of earnest money, will be held by your attorney or escrow officer, depending on your geographic customs. Time permitting, send us your written offer to be reviewed under the document review benefit of your LegalShield Membership, especially if you’re not working with a real estate agent.
8. Select a closing agent or title company. Real estate agents often try to help their clients by referring homebuyers to a title company, but federal law provides that consumers are ultimately responsible for selecting a title insurance provider of their choosing. Many title companies are now owned by lenders, real estate firms, and builders. These arrangements are legal if properly structured and disclosed. The consumer, however, is often best protected when there is no conflict of interest or financial incentive for the referral of title business. We recommend that you select Welch, Gold, Siegel & Fiffik as your closing agent – we will represent you and only you.
9. Inspect the home: Once your offer is accepted, it’s customary to schedule a buyer’s home inspection. This is when you have the opportunity to get a professional opinion on the condition of the home and determine any red flags (like damage, pests, structural issues, etc.). We recommend that you find a qualified inspector at either www.nahi.org or www.ashi.org. Read the inspector’s report carefully and proposed changes to the sales contract based upon the inspector’s report.
10. Close the transaction: The process of closing on a new home can require several weeks (or longer) and many steps. This is where the quality of your closing agent or title company really pays off. During the escrow period, you will work with your lender to secure your mortgage. This process will involve gathering lots of information, signing a lot of paperwork and a lengthly “to-do” list. When the requirements of your sales contract have been fulfilled and your mortgage has been approved, you will be given a final walk-through of the property to determine that all repairs were made as negotiated. On the closing date, you will sign your mortgage documents and receive the keys to your new home. WGSF can reduce the stress and anxiety that often exists when pulling together the final details of a closing and ensure that you understand everything you’re signing before you sign it.