An Overview of the Home Buying Process
Let’s say you have $20,000 lying around and you are tired of renting. Just throwing all that money away. You want a piece of the American Dream. You want to buy a home. But the home buying process is more complicated than passing a bill in Congress, right? Well, it doesn’t have to be.
By educating yourself about the home buying process, you will get a handle on what can be an emotionally exhausting journey. To go from regular renters or parent’s home dwellers to real, grown-up homeowners can be hard, but that is what makes it worth doing, right?
Home Buying Process: The Money
Your first step is to sit down with a qualified mortgage professional that can assess what price range you are in and get you on the road to pre-approval. You don’t want anyone willing to get you pre-approved for a $500,000 McMansion when you really should be looking at starter homes, so finding an honest, realistic mortgage professional is important.
Getting a pre-approval is crucial, because it gives your realtor a leg up on the competition. Once you find the right house, your realtor can begin the negotiations with a solid offer that is backed by official pre-approval. That makes you a viable candidate to buy a house. Even better, you can get a specific pre-approval letter for an individual house once you find the perfect one.
Even with the pre-approval in hand, you are going to want to use online resources such as Zillow, Trulia and Redfin to narrow down your choices in a specific town or area. Once you have found a number of houses that look good online, your realtor can be a great resource to set up viewing appointments, interact with seller’s agents and provide feedback on the houses and the general neighborhoods.
It also helps to pound the pavement by yourself, sans realtor, so you can check out open houses with an open mind. You can learn about your preferences and what you like and don’t like without another (decidedly subjective) voice in your ear.
Home Buying Process: The Offer
Once that dream home appears on the horizon, or the cul de sac, it is time to make the offer. This usually starts and intricate dance between you and the seller. Most people price their home emotionally. You need to attempt to take emotion out of the equation. Be firm in your offer and willing to walk away. You know your financial situation better than anyone, so set your budget and stick to it.
Once you agree on a price with the seller, it is time to really eliminate all the emotion and deal with the cold, hard facts: the inspection.
Home Buying Process: The Inspection
A home inspection is your chance to look under the hood of the home, so to speak. Find a professional that can evaluate the roof, the heating and plumbing, the electrical system and all the myriad potential (expensive) problems the house may have. A good, reliable home inspector should make the seller a little nervous and make you very comfortable. If they get into the crawl spaces and nooks and crannies, then you know you found a good one. Make sure they look for termite damage, water damage and assess the structural integrity.
If it all checks out and you want to move forward with the process, here in New York, it is time to bring in the lawyers. If you are in another state, talk with your realtor or mortgage professional about what to expect or you can click here for a resource that we have found to be accurate.
Home Buying Process: The Lawyers
New York state requires that parties in all real estate transactions have a lawyer represent their interests. In practical terms, this means that the seller’s attorney draws up a contract and your attorney reviews it, then you sign it. In reality, there is generally a certain amount of haggling that occurs over terms, from requiring minor repairs to negotiating a seller’s concession.
Once the haggling is done and you are in contract, three pieces need to come together in order to move forward towards closing: the loan needs to be submitted to the bank for final approval, the bank needs to do its own appraisal of the home and the title search is initiated.
After the house appraises at the agreed-upon price, the loan is approved and all title issues have been cleared up, it is time for the homestretch.
Home Buying Process: The Closing
Before you get to the closing, you and your realtor will do a walk-through of the house and property. If anything has changed or been damaged since the inspection, now is your chance to call it out. And then it is time for the closing.
Ah, the final frontier. The last hour-and-a-half, where the final details are hammered out, the lawyers get to do their lawyering face-to-face and the checks and the keys change hands. It is the culmination of a dream for you and the end of a long, exhausting process.
While you may feel overwhelmed throughout the home buying process, it helps to have the right people in your corner throughout the journey. Make sure you choose your friends wisely and you will be well on your way to a positive home-buying experience.