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Have you ever wondered exactly WHAT steps are involved in buying a home? HGTV and other television shows make it seem like a super simple process, don’t they? Clients visit 3-4 homes, debate the pros and cons and before you know it, they have an accepted offer and they are packing up their boxes!
It doesn’t quite work THAT way in the real world, but it doesn’t have to feel like a daunting process!
1. Deciding to buy.
Home ownership is the best “accidental investment” you could ever make. When correctly done, home ownership becomes an “intentional investment” that lays the foundation for a life of financial security and personal choice. There are solid financial reasons to support your decision to buy a home, and, among these, equity buildup, value appreciation, and tax benefits stand out.
- If you are paying rent, you very likely can afford to buy
- 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
- The lack of a substantial down payment doesn’t prevent you from making your first home purchase
- A less-than-perfect credit score won’t necessarily stop you from buying a home
- The best way to get closer to buying your ultimate dream home is to buy your first home now
- Buying a home doesn’t have to be complicated – there are many professionals who will help you along the way
2. Hiring your agent.
The typical real estate transaction involves at least two dozen separate individuals-insurance assessors, mortgage brokers and underwriters, inspectors, appraisers, escrow officers, buyer’s agents, seller’s agents, bankers, title researchers, and a number of other individuals whose actions and decisions have to be fine tuned and orchestrated in order to perform in harmony and get a home sale closed.
It is the responsibility of your real estate agent to expertly coordinate all the professionals involved in your home purchase and to act as the advocate for you and your interests throughout.
So just what does YOUR agent do?
- Educates you about your market.
- Analyzes your wants and needs.
- Guides you to homes that fit your criteria.
- Coordinates the work of all needed professionals.
- Negotiates on your behalf.
- Checks and double-checks (and triple-checks!) paperwork and deadlines.
- Solves any problems that may arise.
Click for my list of questions you should ask every agent before you select the right fit for you.
3. Securing financing.
While you may find the thought of home ownership thrilling, the thought of taking on a mortgage may be downright chilling. Many first-time buyers start out confused about the process or nervous about making such a large financial commitment. The first step is to determine how much house you can afford.
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Six steps to Financing a Home
- Choose a loan officer.
- Make a loan application and get preapproved.
- Determine what you want to pay and select a loan option.
- Submit to the lender an accepted purchase offer contract.
- Get an appraisal and title commitment.
- Obtain funding at closing.
It is important to choose between several loan officer or lending institutions and it is wise to shop around. If you feel you may have credit issues, we can also refer you to several programs who can — some for free and others for a reasonable rate — offer credit repair services and advice.
Our preferred lenders (no compensation received for these suggestions) have a proven track record, are extremely competent, very professional and knowledgeable, and willing to educate and inform their customers. We know they will do everything in their power to close your loan on time (imperative!) and we can fully recommend any one of them to you with great faith.
If it feels intimidating to speak with a lender, know that they are just people! They are here to help you with this very big step in your journey to becoming a homeowner. As with all decisions related to a real estate transaction, make sure that you interview or shop your lender choices before making a decision, and know that in a certain period of time, multiple requests for loan options will not harm your credit score.
The lenders in our preferred network service all areas of Northern Virginia, and live in Fairfax or Loudoun County. They all three work with local mortgage companies which enables you to be sure that the process will go smoothly, while you still have access to all of the great programs you would with a larger “chain” company.
Once you’ve been pre-approved (there is a BIG difference between the initial pre-qualification and the final pre-approval!), provide that pre-approval letter to your Realtor© as this shows you are ready to proceed to make an offer when you find the perfect home.
4. Finding home.
The process of finding your new home does NOT have to begin on those large monster sites with ads for random real estate agents popping up left and right. It also does not begin by driving all over town looking for “for sale” signs. While it may be exciting to begin attending open houses and perusing the internet for new listings on the market, the most important thing you can do — first — is to carefully look at your wants and needs.
Here are some basic questions to ask:
- What do I want my home to be close to?
- How much space do I need and why?
- Which is more critical: location or size?
- Would I be interested in a fixer-upper?
- How important is home value appreciation?
- Is neighborhood stability and priority?
- Would I be interested in a condo?
- Would I be interested in new home construction?
- What features and amenities do I want? Which do I really need?
Clients who work with us receive access to a detailed, customized and unique Decision Matrix, a series of 8 topics with 8 questions each that really dive in deep to an individual or family’s wants vs. needs. We then look at it together to begin identifying and structuring a home search plan that truly makes sense.
We will utilize our time together in the best way possible and focus on homes, neighborhoods and communities that will truly allow you to flourish and thrive in your new setting. Your home purchase is most likely the most money you will spend in any one transaction.
Isn’t it important that you sit down with a trusted advisor to help you with this process?
5. Making an offer.
When searching for your dream home, you were just that – a dreamer. Now that you’re writing an offer, you need to be a businessperson. You need to approach this process with a cool head and a realistic perspective of your market. Keeping a cool head can be even easier with a professional real estate agent. When you present your offer, you will be offering a price, stating terms and discussing contingencies.
Some of the items that will be included in an offer:
- Schedule of events that has to happen before closing.
- Conveyances are the items that stay with the house when the sellers leave.
- Commission is the real estate commission or fee, for both the agent who works with the seller and the agents who works with the buyer.
- Closing cost which are standard for buyers to pay. If you want to roll the costs into the loan, you need to write that into the contract.
- Home warranty which covers repairs or replacement of appliances and major systems. You may ask the seller to pay for this.
- Earnest money protects the sellers from the possibility of your unexpectedly pulling of the deal and makes a statement about the seriousness of your offer.
6. Due Diligence.
Unlike the purchase of a car or an appliance, 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 home owner’s insurance and property inspections are so important. A home owner’s insurance policy protects you against loss or damage to the property itself and in case someone sustains an injury while on your property. The property inspection should expose the secret issues a home might hide so you know exactly what you’re getting into before you sign your closing papers.
7. Closing Day.
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 a survey, appraisal, title search, and a final check of your credit and finance. Your agent will keep you posted on how each if progressing, but your work is pretty much done.
You just have a few preclosing responsibilities:
- Stay in control of your finances (do not buy anything major or open a new line of credit!).
- Return all phone calls and paperwork promptly.
- Communicate with your agent promptly and consistently.
- Several days before closing, confirm with your agent that all your documentation is in place and in order.
- Obtain certified funds for closing.
- Conduct a final walk-through.
On closing day, with the guidance of a team of trusted professionals, you’ll sign documents that:
- Finalize your mortgage.
- Pay the seller.
- Pay your closing costs.
- Transfer the title from the seller to you.
- Make arrangements to legally record the transaction as a public record.
With the right team in place, and as long as your expectations match that of the process, closing can be an exciting finale to the process of finding the perfect home for you!
8. After the closing table.
Now that you’ve spent a considerable amount of time with your real estate agent, it’s time to keep that relationship going! Instead of throwing all of that trust and rapport out the window, instead use your new relationship to your advantage!
Our clients receive frequent communication from us, whether it’s a home maintenance schedule for their new home, a birthday card or anniversary greetings. We also assist my clients with the documentation they will need for their first tax return as a new home owner (including advice on which receipts to save to maximize benefits). We also maintain a solid list of vendor referrals that we provide to those who work with us.
In addition, a referral is the best thank you a client can give to their agent!
Would you like to learn more about the home buying process? No matter which stage of life you’re in, we would love to talk with you about your real estate needs. Call us at 571.482.7356 or email to info@8thandHome.com.