Home ownership lays a foundation for financial security and personal choice. There are solid financial reasons to support your decision to buy a home. Equity buildup, value appreciation, and tax benefits stand out.
Base your decision to buy on FACTS, not FEARS.
1. If you are paying rent, you very likely can afford to buy
2. There is never a wrong time to buy the right home. All you need to do in the short run is find a good buy and make sure you have the financial ability to hold it for the long run
3. The lack of a substantial down payment doesn’t prevent you from making your first home purchase
4. A less-than-perfect credit score won’t necessarily stop you from buying a home
5. The best way to get closer to buying your ultimate dream home is to buy your first home now
6. Buying a home doesn’t have to be complicated – there are many professionals who will help you along the way
A dozen separate individuals have to be orchestrated in perfect harmony to get a home sale closed – buyer’s agents, seller’s agents, bankers, title researchers, insurance assessors, mortgage brokers and underwriters, inspectors, appraisers, escrow officers. It’s the responsibility of your real estate agent to expertly coordinate all the professionals involved in your home purchase and to act as an advocate for you and your interests throughout the process.
Seven main roles of your real estate agent
1. Educates you about your market.
2. Analyzes your wants and needs.
3. Guides you to homes that fit your criteria.
4. Coordinates the work of other needed professionals.
5. Negotiates on your behalf.
6. Checks and double-checks paperwork and deadlines.
7. Solves any problems that may arise.
First-time buyers start out confused about this process or nervous about making such a large financial commitment. It’s a simple six-step, easy-to-understand process and it’s the FIRST step to make BEFORE house hunting!
Six steps to Financing a Home
1. Choose a loan officer (or mortgage specialist).
2. Make a loan application and get preapproved.
3. Determine what you want to pay and select a loan option.
4. Submit to the lender an accepted purchase offer contract.
5. Get an appraisal and title commitment.
6. Obtain funding at closing.
Driving around looking at homes is fun for only so long – it really should begin with carefully assessing your needs, wants, and values for the short and long terms.
Questions to ask yourself
1. What do I want my home to be close to?
2. How much space do I need and why?
3. Which is more critical: location or size?
4. What features and amenities do I want? Which do I need?
5. Would I be interested in a fixer-upper?
6. Would I be interested in new home construction?
7. How long do I intend to live there?
8. How important is home value appreciation?
9. How much mortgage payment am I comfortable with?
This is when you take off the “dream” hat and put on your business hat! You need to approach this process with a cool head and a realistic perspective of the market. The three basic parts of an offer are price, terms, and contingencies:
Price – the right price to offer must reflect the true market value of the home you want to buy. Trust your agent’s market research to guide you in this decision.
Terms – Financial and timing factors included in the offer are:
1. Schedule – a schedule of events that has to happen before closing.
2. Contingencies – allotted time periods to inspect and appraise the home, and to secure a loan. The buyer can withdraw the offer until these are fulfilled.
3. Commission –this is paid from the seller proceeds to both the agent who works with the seller and to the agent who works with the buyer.
4. Closing costs –standard for buyers to pay their own closing costs, it can be rolled in with the costs of the loan or negotiated for the seller to pay.
5. Home warranty – this covers repairs or replacement of appliances and major systems. You may ask the seller to pay for this.
6. Earnest money – this protects the sellers from the possibility of you unexpectedly pulling out of the deal and makes a statement about the seriousness of your offer.
Once you buy a home, you can’t return it if something breaks or doesn’t quite work like it’s supposed to. That’s why property inspections and homeowner’s insurance are so important.
Property inspections expose the secret issues a home might hide so you know exactly what you’re getting into before you sign your closing papers. These usually occur within 17 days from when your purchase offer is accepted.
- Your major concern is structural damage.
- Don’t sweat the small stuff. Things that are easily fixed can be overlooked.
- If a big problem is revealed, specialists will be called in and you can negotiate repairs with the seller. If a worst-case scenario happens, you can withdraw your purchase offer within the 17 days.
A home owner’s insurance policy is required by law and protects you in two ways:
1. Against loss or damage to the property itself
2. Liability in case someone gets an injury while on your property
The final stage of the home buying process is the lender’s confirmation of the home’s value and legal statue, and your continued credit-worthiness. This entails an appraisal, title search, and a final check of your credit and finances. Your agent will keep you posted on how each is progressing, but your work is pretty much done.
You just have a few pre-closing responsibilities:
1. Stay in control of your finances.
2. Return all phone calls and paperwork promptly.
3. Communicate with your agent at least once a week.
4. Several days before closing, confirm with your agent that all your documentation is in order.
5. Obtain certified funds for closing.
6. Conduct a final walk-through with your agent.
On closing day, with the guidance of an escrow officer and your agent, you’ll sign documents that do the following:
1. Finalize your mortgage.
2. Pay the seller.
3. Pay your closing costs.
4. Transfer the title from the seller to you.
5. Arrange to legally record the transaction as a public record.
As long as you have clear expectations and follow directions, closing should be the exciting beginning of your home-owning experience!
Attention to your home’s maintenance needs is essential to protecting the long-term value of your investment. Home maintenance falls into two categories:
1. Keeping it clean: Perform routine maintenance on your home’s systems, depending on their age and style.
2. Keeping an eye on it: Watch for signs of leaks, damage, and wear. Fixing small problems early can save you big money later.
Even after the close and you are comfortably settled into your home, your agent still wants to help you:
1. Identify the documents needed for your first tax return as a homeowner.
2. Find contractors to help with home maintenance or remodeling.
3. Help your friends find homes.
4. Keep track of your home’s current market value.
5. Stay in touch to receive news about market changes or should any new real estate need arise.