The Buying Process
Buying a home step by step
Buying a Home Step by Step
Get preapproved
Your down payment
If you have a home to sell
Does it cost me money to make an offer?
Writing the offer
How does my offer get presented to the seller?
What happens if I offer less than asking price?
Where does my earnest money go?
Can I lose my earnest money?
The home inspection
After the inspection
Final walk through
Closing
When do I get the keys?
- Get Preapproved
Prequalifying for a mortgage generally helps you determine how much house you can afford.
Most lenders require that your monthly mortgage payment, including principal, interest, taxes and insurance, range between 25 and 28 percent of your gross monthly income. Our Financial Calculators will help you determine your home buying budget. Becoming prequalified does not necessarily mean that you will be approved for a loan amount.
Preapproval from your lender means that you have provided them with the necessary paperwork, and they have approved your actual loan amount.
Having preapproval for a home loan will put you in a much better negotiating position, because the seller knows that you are able to obtain your loan to purchase their home. Whether you are preapproved or prequalified, it is a good idea to put a "financing contingency" in the purchase and sale agreement that will protect you in the unlikely event you can't get a loan.
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- Down Payment
You will need to decide how much money you will be putting as a downpayment on the home you are going to purchase. Most lenders require a 5 to 20 percent down payment; 25 percent or higher down payment may qualify you for a lower percentage rate. There are many exceptions to this, and you may easily qualify for a zero down home loan. For more information please contact me and I will be happy to assist you in finding a financing package that best suits your needs.
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- If you have a home to sell
If you will need to sell a home before you purchase a new home, there are a few ways this can be accomplished. You may want to consider a "contingent" offer. This simply stated that the home you are purchasing is "contingent" on the home you are selling. This is possible in today's market, but to put yourself in the best negotiating position, talk to us about putting your home on the market. If you choose to write an offer on a new home before selling your existing home, you may not have the same negotiating power as one whose home has already sold (or at least has an accepted offer). The seller may be hesitant to accept your offer because there are too many things that must happen before the sale can close. One way around this is to aquire a bridge loan. This allows you to use the equity in your current home to purchase a new home. Contact me for more information regarding Bridge Loans.
The other option is to simply buy a new home, move in, and then put your old home on the market. Providing you have the financial means, this is the best option.
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- Does it cost me money to make an offer?
When you write an offer on the home you chosen, you will be expected to include an earnest money deposit. The deposit is a sign of your good faith that you are seriously interested in buying the home. In general we advise 3% to 5% percent of the purchase price to present as earnest money with an offer. This is not a hard and fast rule, as it can be less, or even considerably more. This depends on many factors, and we will discuss the best scenerio in you situation. [back to top]
- Writing the offer
We will discuss the terms you want to include in your offer, (purchase price, desired closing date, inspection, etc.) and we will prepare all the necessary documents for your review. We will meet with you and go over the terms in detail, and your duties as a buyer. You will then sign the offer, provide an earnest money check, and we're ready to present the offer.
For your convenience we have provided a
Draft my offer form to easily provide us with the terms you would like.
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- How does my offer get presented to the seller?
Once we have written an offer, I will call the agent who is representing the seller of the home you have chosen. We will make an appointment with the seller to present your offer. I will be there to explain the details of your offer and negotiate on your behalf.
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- What happens if I offer less than the asking price?
If you offer less than the sellers full asking price, the seller has 3 options. They can accept the lower offer, counter your offer, or reject it completely. Remember that there could be another buyer who is also interested in the home you've chosen. If they happen to write an offer at the same time you do, the seller will have 2 competing offers to compare. There are usually many aspects of each offer to consider, but ultimately the seller will want to accept the best and most complete offer. If the seller "counters" our offer, we have the opportunity to "counter" their offer. It is not uncommon for these negotiations to go back and forth several times before everybody agrees. Once all parties have agreed and signed, we have what is called "mutual acceptance."
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- Where does my Earnest Money go?
Once the buyer and seller have mutually accepted the offer, the earnest money is deposited to the Escrow company that will be handing the closing of the home purchase. That deposit becomes a credit to the buyer, and becomes part of the purchase expense. In short, the earnest money goes towards the purchase of the house.
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- Can I lose my earnest money?
Real estate contracts are complicated legal transactions. This is another area where having a knowledgable and professional agent is a necessity. Rarely does the buyer lose the earnest money. Most often, if the transaction falls apart, there are circumstances beyond the buyer's control that cause it to happen. If the buyer willfully decides, however, that they no longer want to buy the house and has no legal reason for rescinding their offer, then the seller has the right to retain the earnest money. Also, there are several safeguards that can be built in to a contract to provide a buyer several opportunities to terminate the contract and be refunded their earnest money.
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- The Home Inspection
Once we have mutual acceptance we now have the opportunity to conduct an inspection of the home with a professional home inspector. (We have several inspectors that we work with regularly that will do an excellent job). Once we have an inspection report we may want to ask the seller for a few repairs to be made, or negotiate a sellers financial concession to take care of the necessary repairs, or if something real ugly turns up, we have the opportunity to terminate the contract and you will be refunded your earnest money. Then we get to go find another home!
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CONDO: If you are planning on purchasing a condo, you will also be given the opportunity to review the condominium resale certificate. This is an important part of a condo purchase. Essentially what you are inspecting is the health of the Home Owners Association. You will learn about things like "reserves" "meeting minutes" and "litigation". You can read the most recent meeting minutes and the house rules. This isn't as scary as it sounds.
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- What happens after we approve the inspection?
The next step is to follow-up with you lender (mortgage broker) or banker and make sure that the financing arrangements are being taken care of. You may need to provide additional information for your lender to complete the loan process. Once they have everything they need from you, we go to "underwriting" and await loan documents to be sent to the escrow company. Escrow is the neutral third party that will be handling all the financial payouts.
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- Final Walk through
Sometime between inspection approval and the final closing date we may want to do a final walk through of the home BEFORE we sign final documents. This would be to make sure any items we requested to be complete before closing are actually complete. If there is an issue, we have the opportunity to postpone the closing until the seller fulfills their obligation to fix, repair, clean or remove any items we requested during the inspection process.
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- Closing the process
Once we have fulfilled the obligations of the inspection, and any other contingencies that were in the contract, we will be scheduled for our final "signing appointment". This generally happens 2 or more days before the actual closing date. You will be provided with a dollar amount that will be necessary for you to bring to closing. This can be in the form of a cashiers check and is applied to the balance of your downpayment. At the final signing ceremony you will present your check, and sign all the appropriate documents. For scheduling purposes plan on about 30-45 minutes to review documents and do all the signatures. If you are doing a first and a second mortgage, plan on at least 1 hour for signing. Also, make sure you bring in your drivers license.
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- When Do I Get The Keys?
After you have signed all the documents the process is not complete. The Escrow company will be handling all the money transfers and getting a release to "record". Official home ownership does not happen until we have a recording number on your transaction. This can happen the same day but that's really pushing it. Please plan on at least 1 business day for Escrow to make all their magic happen. Once we have a recording number, you are a new home owner! We can then meet at the home and your keys will be transfered to you. And of course a little celebration will be in order!
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Are You Ready?
You may have found the home you want, or just in the start-up phase of buying a home. It's no worry! We understand that it takes time to research, mentally prepare, and then decide to move forward on a home purchase. We have many success stories from people just like yourself and we encourage you to use this site as your homefinding resource. When you are ready to take it to the next step, we are here for you!
