Buying Your Home
Owning a home is more than a smart financial investment; it’s an investment in your quality of life. You can decorate or renovate however you like, customize your landscape, change that paint color. It’s your home.
This guide is a look at the home buying process for first-time homebuyers
efore diving in, ask yourself, “Is this the right time for me to buy?” The considerations below will help to answer that question.
Owning vs. Renting
Owning a home does come with risks and responsibilities that you don’t have to deal with when you rent. These include mortgage, property taxes, homeowner’s insurance, home maintenance, and repairs. Even so, financial advisors and homeowners themselves know that there are far more advantages than disadvantages to owning.
For instance, over time you’ll generally lose money by continuing to rent versus owning your own home. Why not build up equity in your own home instead of paying your landlord’s mortgage? Although there are periodic market drops, owning a home has historically been an unequaled financial investment. You may also gain many ongoing tax benefits.
Do you qualify to own?
Before you can get your new house decorated, you’ve got to get your financial house in order. Speak with an experienced Loan Officer (your agent can suggest one) and have them perform a credit check and general fiscal analysis. Also, keep in mind that you may be eligible for loans insured by the Veterans Administration (VA), the Federal Housing Administration (FHA), or Rural (USDA) Loans. You may qualify for free-money grants or silent second mortgages to help you with your down payment.
Is it a good time to buy?
Generally speaking, if you’re financially qualified and ready for change, your timing is right. The bottom line is that if you are currently renting but want to own a home, have the funding, and The Olson Group in your corner – it’s a good time to buy.
We can assess the current local market conditions and fully inform you about your options. As an industry insider, a licensed agent will often get the scoop on excellent real estate opportunities you might otherwise miss!
Define your goals, do your research and develop a plan
Giving the green light to future homeownership means educating and preparing yourself as much as possible. Know what your reasons are for buying, and determine the kind of home, neighborhood, and features you must have, want, and absolutely do not want. Since buying and financing a home are fundamentally connected, you’ll also need to examine your current financial situation and know what you can realistically afford.
As a buyer, you shouldn’t be charged any fees by your REALTOR®.
Once you’re clear on the above, you’ll be in a better position to research housing and mortgage options and create an action plan with timelines for moving forward. While it’s possible to do this yourself, you may benefit from consulting an experienced real estate professional right from the start.
Contact a REALTOR®
Buying real estate is a complicated matter with many factors to consider as no two homes or transactions are alike. An expert on your side will help you navigate the unique opportunities and potential pitfalls. Contact us when you begin to think that you might be ready to buy. A professional agent will guide you through the property search, financing, negotiation and transaction processes. Consider their local market knowledge, experience, and track record when evaluating potential agents.
Get pre-approved for a loan
It’s important to get pre-approved for a loan before you start viewing homes in earnest. The pre-approval process involves meeting with a lender and authorizing them to examine your current financial situation and credit history. From this examination, the lender may provide you with a document detailing the amount you can borrow to buy a home.
The benefits of pre-approval include
- You’ll know what you are eligible to receive and be able to plan accordingly
- As a qualified, motivated buyer you’ll be taken more seriously when you make an offer
- Lenders can tell you if you qualify for special programs that will help you afford a better home (particularly if you’re a first-time buyer)
Financing is available from many sources, and your real estate agent will be able to suggest lenders with a history of offering excellent mortgage products and services.
View homes and find THE ONE
The secret to a happy home search is in knowing what you want. That means distinguishing between must-haves add like-to-haves. To help you target your search and define your home preferences priorities, download our Home Buyer Wish List and have all decision makers fill one out separately
A few interesting facts about the search process for perspective buyers:
- 92% of buyers use the Internet or mobile apps to search for homes
- The typical buyer searches for ten weeks and views ten homes
- 97% of buyers view real estate agents as necessary in the home search process
With today’s mobile apps and online real estate websites, you can view homes, see details, take video tours, and access neighborhood info. Technology can be a great tool in your search process
However, it’s necessary to view homes in person. While the property details may seem similar online, homes can be very different regarding layout, design, quality and other aspects. Ideally, you should view homes with the help of an experienced real estate professional who may notice things you might miss, proven expert analysis, and act as an impartial sounding board.
Make an Offer and Negotiate
When you’ve found the home you’d like to buy, it’s time to make an offer. Your state or local real estate association have contracts that are used for transactions in your area. These contracts enable you to define the terms of the purchase process and also allow the inclusion of clauses defining various terms of purchase, such as the closing and possession dates, your deposit amount, and other conditions.
You should carefully review these clauses with your real estate professional to be sure that they accurately express your intended offer. In addition to drawing up the contract, your real estate professional will be happy to address all of your questions about the offer process
Once you’ve written the offer, your real estate professional will present it to the seller’s representative. The seller can then accept your offer, reject it, or counter it to initiate the negotiation process
Successive counter-offers, which include deadlines for responding and meeting conditions, may be exchanged between you and the seller until a pending agreement is reached or no Zone of Possible Agreement (ZOPA) has been identified. Negotiations involve many factors explicitly relating to different market conditions, homes and sellers, and other variables that a qualified, professional agent can handle with ease.
Secure Your Financing
Once you have a pending agreement, it’s time to return to your chosen lender to settle the mortgage details to close the deal. Which means finalizing your down payment, interest rate, regular payment schedule and all other financial conditions associated with the closing. As the saying goes, “let the buyer beware.” Unfortunately, too many buyers suffer adverse consequences from not fully understanding their financing decisions. Thus, it’s crucial for you to work with people you trust. An excellent real estate professional can become a true friend for life.
Closing the Deal
Taking ownership of your new home should be a joy with no surprises if you’ve efficiently taken care of everything connected to it. Critical steps to the closing, also referred to as the “escrow” or “settlement,” include:
- Getting a title search – you will need a historical review of all legal documents relating to ownership of the property – to ensure that there are no claims against the title of the property. It’s also necessary to purchase Title Insurance for protection in the event of errors in the records or mistakes in the review process. Typically, you will purchase this to protect your lender’s interest in your new home, and the seller will buy a policy for you as an act of good faith.
- The final walkthrough – you will have a chance to look at the home one last time to make sure it’s in the same condition as when you signed the sale agreement.
- The settlement – typically, on the Closing Date you’ll meet with your real estate professional and escrow agent to verify and sign all the paperwork required to complete the transaction. The settlement will include paying your closing costs, legal fees, property adjustments and transfer taxes. At that point, you’ll receive the property title and copies of all documentation about the purchase.
- Oh, and one more thing – you’ll get the keys! In most cases, possession date will fall within a few days (on the “Recording Day”), and you will be able to move into your new home.