Buying a home is one of the most exciting milestones of your life. To prepare yourself for this moment, you need to know what to expect during the process. This step-by-step first time buyer’s guide will help reduce the stress of buying a home and help you enjoy the journey as much as possible.
So, the first step that I would recommend is to hire a Realtor®. Although you’re able to look at homes on the internet, you can’t always rely on that. These websites are not always entirely accurate and up-to-date. I’m not saying to avoid looking online at all costs, but they have their pros and cons. It’s great to have the ability to see the finishes and layout of a house before actually seeing it in person; however, some of the information on these sites can be inaccurate. By hiring me, I can set you up on an MLS drip which sends you properties right as they are listed on the market. I can also give great advice on properties, neighborhoods, and much more. I can also explore for you exclusive listings within our brokerage for a specific period of time before they even hit the MLS or are marketed to anyone outside of our brokerage’s agents. It’s so important to act promptly when you find the home of your dreams, so I’m happy to offer that exclusive advantage to my clients. I also can help you access a network of mortgage lenders, attorneys, and contractors.
I can recommend great mortgage lenders that will get you pre-approved. There are many benefits to getting pre-approved and I highly recommend that all of my buyers start with this step before looking at any houses. The main benefit is to determine a budget. A good mortgage lender will discuss with you a healthy price point to look for. Something that you can reasonably and realistically afford. There can be a lot of extra expenses that come with owning a house that you might not think of, especially if you’re a first-time homebuyer. He/She will lay everything out, so you’re fully informed on the purchase you are about to make. The second main benefit is the credibility that it adds to your offer. A seller will not even consider an offer that comes in from a buyer who is not pre-approved.
We’ll work together to find the perfect home for you and your budget. Most homes are found on the internet, but here is no better way to view properties than to physically tour them. A walk-thru of a home in-person will determine if the features are exactly what you are looking for. I highly recommend going to as many open houses as possible and it will be my pleasure to come with you! They give you a good understanding of what to expect at your price point. I can also set up private showings for you. You’ll get to walk through a property with just you and me, to get a truly personal tour. I also recommend that you always do a drive through of the neighborhood that a listing is in. It’s important to get a feel for the surrounding area, and you can’t see this on the internet listing.
So you find the house that you love and you’re ready to make an offer. We’ll work together to draw up the best offer to secure the home. Depending on what the home is listed at and whether the current environment is a buyer’s or seller’s market, your offer may be below, at, or even above the asking price.
Once it’s ready, I will submit the offer on your behalf to the seller’s agent. Once the offer is submitted, you wait to hear back from the seller. There are a few outcomes that could happen at this point. They could reject your offer, which means you’re out of luck and have to move on to the next home. Or they could send a counteroffer. We’ll work again together to decide on an amount that works with you that will be sent back to the seller. Another possibility is a multiple-offer situation. Sellers have several ways to deal with multiple offers: they can accept the “best” offer; they can inform all potential purchasers that other offers are “on the table” and invite them to make their “best and final offer”; they can “counter” one offer while putting the other offers to the side awaiting a decision on the counteroffer; or they can “counter” one offer and reject the others. The outcome, and the one that you are hoping for is an accepted offer.
Your offer was accepted by the seller and now it’s time to sign contracts. This is also when you will present your deposit check to the seller.
Notify the attorney within 3 days of acceptance of your offer. You can pick the attorney of your choice (or I can refer several attorneys you can contact). The attorney will verify that the seller has the right to sell this real estate. One of the responsibilities your attorney will have is to perform a title search, where public records will be searched for signs of errors, liens, encumbrances, outstanding payments, and easements. The property's boundaries will be verified, and the chain of title will be investigated for signs of forgery, impersonation, or missing heirs. Once the title search is done and no defects were found —or if found, were settled— the attorney issues title insurance for your property to protect you from any financial loss or cost derived from your property's past owners.
Just like me, your attorney will also be responsible for overseeing and guiding you throughout the closing process. He/She will review all documents such as the deed, seller's affidavit, bill of sale, transfer taxes, loan notes, mortgage, and all other documents. Then, he/she’ll be responsible for filing all the paperwork to legally record the transaction.
In most cases, your offer will be contingent on having the home inspected to ensure there is no major structural damage or large repairs needed. I can help you arrange this, and you can schedule it within days of making an offer. If there are no major issues, the process goes to step eight. If there is, you can renegotiate your offer based on what needs to be fixed, or you can withdraw it.
Now is the time to go back to the mortgage lender who pre-approved you and choose your mortgage. You will be presented with various options based on your unique financial situation, including fixed-rate, variable-rate, 15-year, 30-year, or special programs such as VA loans or FHA loans. Work with your mortgage lender to select the option you feel the most comfortable with.
You'll need insurance for your new home before the closing. Almost every lender requires homeowner insurance as a condition of your loan agreement. While your homeowner’s insurance policy cannot be effective before your closing date, note that you must also have your homeowner’s policy in effect on the same date that you close if you have a mortgage on your new home. If you are not prepared to have your policy in place when you close, you will likely delay the closing. As part of this preparation, you will need to provide your insurer with the mortgagee clause from your mortgage company and let the insurer know your closing date to make your policy effective at that time. You can pick the home insurer of your choice (or I can refer one you can contact).
The next step is to get an appraisal on the property. Mortgage lenders require an appraisal on the property to confirm the home is worth the purchase price. Essentially, this is a way for the bank to protect their investment. Your loan officer will schedule the appraisal with the listing agent. As the buyer, you are responsible for paying for the appraisal as well. The average cost of home appraisals is roughly $500.
A Mortgage Contingency is a clause that is written into the sales agreement that can void the sale if certain conditions are not met. More specifically, this clause is protection for if the buyer is unable to secure mortgage financing. The buyer must obtain a loan approval within 30 days from the signing of the contract (offer accepted).
“Clear to close”! These three words means that everything has been approved on the sale and we are ready to move forward with closing. After getting the clear to close, your realtor can schedule a day and time for closing.
The day before closing, you and I will take one last tour of the house to confirm the property condition has not changed. Some things to look for are that conveying appliances are still in place, there is no new damage to interior features, new water leaks, unexpected furniture left behind, etc.
This is the time you’ve been waiting for! The closing must be in person. You will go through all of the paperwork in the contract with the closing attorneys. Once finished, you will receive the keys to your new home (typically within hour, unfrequently one day after)! Make sure you bring the following to closing: a photo ID and a bank check for “cash to close” (contact your lender to get this amount prior to closing).
The house is yours, now it’s time to make it a home. From the moment your offer was accepted, you can expect to move in roughly 30-45 days later. This is if there are no contingencies, delays, or any other issues within the transaction.
Get assistance in determining the current property value, crafting a competitive offer, writing and negotiating a contract, and much more. Contact Magali today.