Five steps to home buying is an overview of the home buying process. As time goes by, I will review each of the five steps to home buying individually. I will be the first to agree that it is not rocket science, but I do believe that the process is made much easier with the help of a buyer’s agent. (A buyer’s agent is a real estate agent representing the buyer via a buyer-broker agreement).
The five steps to home buying are:
- Honest evaluation of your current situation.
- Careful determination of your needs.
- Thorough review of possible homes.
- Negotiation of your offer to purchase.
- Fulfilling requirements of contract prior to settlement.
The honest evaluation of your current situation will require that you take stock of your finances, speak with a lender regarding a mortgage and decide if that amount you are comfortable paying will be sufficient to carry your loan. The type loan program you choose will dictate how much cash you will have to have. In general, FHA loans require a lower amount of down payment ( around 3.5%) and conventional loans will require about a 20% down payment. There are programs that fall in between these amounts. A good lender will be able to direct you.
The careful determination of your needs should include the size, type and location of your new home. The lender will have given you a price range to work with while searching. Often the decision will be impacted most by location. While you can certainly find bargains close to the city, prices are usually lower as you move farther from the city. The counsel of an experience real estate agent is very valuable during this stage.
The thorough review of possible homes usually begins with an on line search of possible homes. You may have already discovered that the internet is a well stocked resource of homes. Here is another step that is aided by a good real estate agent. The wide range of homes that show up on line are not always what they appear to be. An agent can go through listings and give you an accurate picture of homes available. Following the on line search, you will visit homes that seem to meet your criteria. The eyes and ears and knowledge of an experienced agent are your best resource in this phase. DO NOT…Let me repeat…DO NOT fall prey to a listing agent. The listing agent CAN NOT represent you and their only goal is to sell the home for their client (They only can represent the seller).
The negotiation of your offer to purchase is one of the most crucial points in the home buying process. In plain language, this is where the rubber meets the road in the purchase of a home. An experienced agent will make certain that your interests are protected in every aspect of the contract. Less experienced agents may prepare an offer that does not protect you completely. Again, this is the most important juncture of your purchase. Negotiations will determine what you pay and the condition the home MUST be in when you take possession. Things like appraisals, inspections and possession are covered in the actual offer. You may think you are saving money by going a discount or rebate route, but you may also be putting the entire process at risk.
Fulfilling the requirements of contract prior to settlement can be a confusing process for the lay person. An experienced agent will have the time table and required actions set in a calendar. There are many things that must occur between contract ratification and closing the sale. Some things will relate to contingencies in the contract and others will relate to your lender. It is very important that you respond to requests from your lender quickly. They may be requesting information that seems burdensome, but they are only following the direction of the underwriters. In many cases, as closing nears, you will feel the pressure build. An experienced agent has guided many clients through this process and they will gladly “hold your hand” and calm your nerves. Experience makes a big difference.
Five steps to home buying is an overview of the home buying process, but it does offer a general idea of the steps necessary to purchase a home. As you can see, while it is not terribly complicated to those in the industry, it can be confusing to the average person. You will find other lists and other thoughts on this process if you Google “home buying steps”. This is based on my years of experience as an agent in the Maryland and DC area. My clients are all treated the same way and they do experience the difference.
If you have any questions about the process, feel free to contact me, I really do love my job.