Step-By-Step Guide To Buying A House.

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Buying a house can be a very stressful process and it can be hard to know where to even start. According to a poll done by the Daily Mail buying a home is more stressful than bankruptcy, divorce, or even death of a loved one.

In a poll done by the National Association of Realtors other than finding the right property, millennials identified “understanding the home buying process and steps” as the most difficult item in the journey. However, by knowing the process you hopefully relieve yourself of some of home buying stress and possibly avoid some of the common home buying mistakes.

Find out what kind of home you’re looking for.

When you start looking for houses you will find that there are so many options but not all houses fit your needs. If you have pets than a big yard may be a must but someone without pets may want a low maintenance yard. So it’s important to put together criteria for the house that fits your needs. 

One of the best ways to find out what is important to you is by looking for houses online. Seeing what is available can give you a good idea of what features your future house needs to have and what you can live without. This is why 90 percent of home buyers start their search online. 

Looking online will also give you a good sense of the price of homes in your area. The house that fits all of your criteria could be out of your price range so being in tune with the market can give you a good idea of what you can afford.

Get Pre-Approved To Buy A House.

Many home sellers will not consider an offer from a buyer that has not been pre-approved by the lender. Pre-approval is the pre-qualification for a loan or mortgage of a certain value range. Meaning that the bank has reviewed your financials and will approve you for a home loan up to a certain amount.

Getting pre-approved is a fairly simple process, all you need to do is contact your banker. Your banker will ask that you supply some documents such as; pay stubs, tax records, proof of assets, etc.  Once the lender verifies your financial information, which may take a few days, it should supply a preapproval letter you can show a real estate agent or seller to prove you’re able to purchase a home.

Having a pre-approval letter can also give you more negotiating power because it shows the seller that you are serious and able to close on the property. Many sellers are more likely to accept a lower offer from someone who is pre-approved than a higher offer from someone who might not be able to purchase the home.

Hire An Agent.

Having an agent to help you through the buying process can be so helpful because they have access to the MLS they are able to send you properties that fit your criteria. Agents are also very in tune with the housing market so they can advise you on whether a home is overpriced or not.

You do not have to hire an agent if you don’t want to but they can save you a lot of time and headache when looking for homes. Another great thing about buyers’ agents is that their fee is negotiable and many times are paid for by the seller.

One thing to consider is that many times sellers will give you a discount if they do not have to pay for the buyer agent. The buyer agent is negotiable but is usually 3 percent of the price of the home. So if a house is $200k the buyer agent fee would be $6,000. If the seller did not have to pay this they would be much more likely to give you a break on the price.

Finding A House To Buy.

Now that you have gotten pre-approved and hired your agent you’re ready to find a home to buy. Once you have reached this step you can shop with confidence since you are pre-approved and have a good sense of what you are looking for. 

If you discuss your criteria with your agent they can help you set realistic expectations for your budget as well as target your search to area that you can afford. This can save you loads of time looking at houses that are not in your budget or don’t fit your must-have criteria.

Once your agent has an idea what you are looking for they can begin setting up showings for you to look at some homes. Remember you don’t have to choose the first one you look at. Buying a house is a big decision and is hard to reverse so as long as you have reasonable expectations you will find a house that is perfect for you.

When looking for houses take note of the price. Not only the price of the home you are looking at but also of other houses that have sold in the neighborhood. You are making a financial decision so just because a house is in your budget and fits your criteria doesn’t mean that its something you should buy. If the house is overpriced than it might not be a good fit. However, you can always try offering less for the house.

Making An Offer On A Home.

Once you have found the right house its time to get serious by making an offer. An offer is made by filling out a sales contract with all the relevant information including price and sending it (or have your agent send it) to the sellers’ agent. 

Your real estate agent will help you submit a good offer. The offer will not only include the price there is other items that need to be included such as:

  • Address 
  • Sale price
  • Terms—for example, all-cash transactions, or  “subject to”
  • Seller’s promise to provide clear title (ownership)
  • Target date for closing (the actual sale)
  • Amount of earnest money deposit accompanying the offer
  • The method by which real estate taxes, rents, fuel, water bills, and utilities are to be adjusted (prorated) between buyer and seller
  • Provisions about who will pay for title insurance, survey, termite inspections and the like
  • Other requirements specific to your state
  • Offer expiration date
  • Contingencies 
  • Close date

It’s also important to remember that the fewer contingencies the more likely your offer is to be accepted. There are some contingencies that can’t be avoided but your agent will be able to help you put the necessary contingencies into the offer.

Once your offer has been submitted the seller has three options accept, decline, or counteroffer. If the seller chooses to accept the contract will be signed and will go into effect immediately. If the seller chooses to decline the offer they will usually inform you as a courtesy and then let the offer expire. If the seller wants to counter they will write up a new offer and send it back to you. This process is then repeated until an offer is accepted by both parties

Closing On Your Home.

The closing is a multi-step process in which the contracted is executed and final paperwork is signed but before this can happen there is a few technicalities that need to be taken care of.

Before you close on the house you want to make sure that the home you are buying has no hidden damage. The best way to go about this is with a home inspection.

A home inspection can cost anywhere from $200 to $600 but will ensure that the biggest purchase of your life doesn’t have any hidden damage. Once you hire the inspector you can set up a time for the inspector to do a walkthrough on the house. He/she will test all of the major components such as HVAC, roof, foundation, etc. after the inspection you will be provided with a list (if any) of repairs that need to be made. If there are repairs to be made you can ask that the seller take care of these repairs or you can request a reduction in the price.

You can also consider getting other professional evaluations like a termite inspection or radon test, depending on the advice of your real estate agent and the age and condition of the home you’re purchasing.

If you are getting bank financing on the home then you will be required to have an appraisal of the property. This is to protect the bank from lending more money than the house is worth. This is also in your best interest because you wouldn’t want to overpay when you buy the house. 

You are now ready to close. A closing date will have already been selected and specified in the contract. On this day you will be allowed one final walkthrough of the home and if everything checks out you are ready to close. 

Before you get the keys to the house you have some paperwork to sign. You will most likely receive copies of the closing documents for you to review so there is no surprises on closing day. On the closing day, you will need to go down to the title office to sign the necessary documents. Your agent will most likely meet you at the office to walk you through the process. Don’t be afraid to ask questions about anything you don’t understand. 

After both parties have signed the closing documents the transaction will be funded. 

Conclusion

Congratulations, you are now the owner of your own home. The home buying process can be a long one but is definitely worth it in the end. Buying a home is a wonderful thing but many homebuyers are too stressed to enjoy the process. The good news is that by understanding the home buying process and steps you can relieve a lot of the stresses that come with doing something for the first time.

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