12 STEP GUIDE
Buying your first home is an exciting adventure! To succeed in the BIG step, you need to follow a few small steps that will help you not only find the right home but have an enjoyable experience throughout the process. When you buy a home you become an investor. That’s right. The place you live becomes one of the largest investments you’re likely to make and it can yield great returns for your future. By following these steps, you’ll be ready to make your first home purchase one of the best investments of your life!
1. HIRE A BUYER’S AGENT TO REPRESENT YOUR INTERESTS
A buyer’s agent is a licensed professional that represents you and your interests throughout the entire process. The cost of a buyer’s agent is typically paid for by the seller at the time of the sale, so you aren’t obligated to pay for anything until you find the home you want to purchase. From searching for the perfect home, to determining market value, to contracts, and negotiations – an experienced agent will guide you throughout the entire process all the way to closing day.
2. GET PRE-QUALIFIED WITH A LENDER
Getting your finances lined up is a must for the home buying process. Meet with a lender so that you can determine the amount you are qualified for, how much down payment and closing costs you will pay, and what your monthly payment will be. It’s always a good idea to meet with more than one lender to compare costs. Your lender will provide you with a loan pre-qualification letter, which will be helpful when it’s time to make an offer.
3. CREATE A WANTS / NEEDS LIST
Create a wants and needs list that outlines what you desire in your first home. Important items to consider are: price, location, size, age, number of bedrooms, bathrooms, and living areas, and neighborhood amenities.
4. SEARCH HIGH AND LOW
Searching for a home is the fun part, but it’s not as simple as searching on the MLS – not if you’re going to find “the one”. Searching the MLS on murney.com is definitely the best place to start – it’s where you’ll find the most accurate information on homes for sale in our area. Your agent also has access to homes that are not yet on the market, as well as homes that were previously on the market. Homes that are offered for sale by owner, as well as homes that are not even on the market should be considered. You want to consider every possible avenue so that you can be sure you’ve found the right home to fit your needs.
5. MAKE AN INFORMED OFFER
A seller’s asking price may or may not be in line with market value. In order to make an informed offer, you first need to complete a detailed comparable market analysis that helps determine that fair market value of the property. Once you determine a range of value, you also need to decide the terms of your offer. This includes items such as earnest money amount, loan terms, contingencies, attachments, and the closing date. Your buyer’s agent will advise you on all of these terms. The seller can either accept, reject, or counter your offer with terms that are acceptable to them. Once all parties have signed a contract with agreed upon price and terms, you are now officially under contract.
6. INSPECT THE PROPERTY
Once you put a property under contract, you should then hire a professional inspector to look for any problems with the home, including termites. Inspectors will check the home from the foundation to the roof, and they will provide you with a detailed list of defects with the home, so that you can either ask the seller to make the needed repairs, or plan on making the repairs yourself.
7. GET AN APPAISAL DONE
An appraisal is an unbiased professional opinion of the value of the home, typically required by the lender, but paid for by the buyer as part of your closing costs. Appraisals help the lender know that the loan they are making on the property is secured by a value equal to or greater than the loan amount.
8. REVIEW THE TITLE COMMITMENT
Sellers are required to provide you, the buyer, with a clear and marketable title to the property. A clear title means that there are no outstanding liens, claims or interests on the property claimed by someone other than the seller. The title company performs a title search to ensure the title is clear, and then provides you, the buyer, a Title Commitment to insure the property after closing.
9. CONFIRM COMPLETION OF REPAIRS
Once the seller notifies you that all repairs on the property are complete, it is best to have your property inspector re-inspect the repairs to ensure they were completed correctly. You may also have the seller provide pictures and receipts of repairs.
10. PREPARE TO TAKE OWNERSHIP
To prepare to take ownership of your new home you’ll want to make sure you have a home insurance policy lined up, and notify the utility companies of your effective start date (the day of closing). You might also plan on changing your address with the post office, and lining up a few friends to help you move (free pizza anyone!).
11. DO A FINAL WALK-THRU
The final walk-thru is your last opportunity to see the property prior to taking ownership. The walk-thru is done to ensure the seller has removed all items from the property and that the condition of the home is unchanged.
12. CLOSING DAY!
Closing day is the predetermined date, written in your contract, when all closing documents are signed by both parties and all fund exchange hands. As the buyer, you’ll bring any required funds (closing costs and prepaids) to the closing, and your lender will bring or wire the remaining balance (your loan amount). This is also when the seller will hand over all keys and remotes to the property. Once documents are signed and money is transferred, you are a homeowner! Congratulations!
TERMS TO KNOW
THE MULTIPLE LISTING SERVICE (MLS)
The MLS is a database of listed properties established by the local board of Realtors where cooperating brokers can share data on properties they have for sale.
EARNEST MONEY
Earnest money is an amount of money pledged by the buyer to the seller, usually held by a title company, that shows the buyer’s good faith in the transaction.
CLOSING COSTS
Closing costs are fees you pay for the services to process the purchase of your home. Services may include the title company, lender, appraiser, inspector, surveyor, and attorney fees.
PREPAIDS
Prepaids are usually made up of property taxes, insurance and mortgage interest. Your bank requires you to pre-pay these accounts in order to protect their investment.
CONTINGENCIES
Contingencies are terms that have to be met in order for the purchase to proceed or be finalized. The most common contingencies are for loans, inspections, and appraisals.
