I’ll give everything you need to know to purchase a home so there’s no surprises. Buying a house is not easy. What I can promise though, is that it will be worth it.
I love real estate. I love it for several reasons. First, it’s a necessity. Food, water and shelter. I help to provide shelter for people that they OWN. That is deeply rewarding for me. Second, owning real estate is a proven path to wealth.
It’s a complicated process, so trying to purchase a home without an agent would be like going on trial and not having a lawyer. It’s the largest purchase most people will ever make in their life. The second thing you need to know is that any licensed real estate agent can show you any property that is listed for sale. It doesn’t matter what company that house is listed for sale with. The real estate agent you choose to work with can show you any house that is listed for sale. Now I’ll show you that it’s absolutely attainable, but you’re going to have to put in the work.
Let’s take it in the order of what you’ll need to do to purchase... all the way through to closing (when you get the keys)!...
- Apply/Obtain a Loan to buy the house
First you will either need to go into a bank, credit union or mortgage company to get prequalified for a loan. You will generally need to have a minimum credit score of 580 to qualify. There are different types of loans available and you and your lender will go over different loan options to determine which one will work best for your particular situation or the type of home you’re looking to buy. You will also need to have a job in the same line of work for the past two years and all taxes will need to be filed.
In addition to securing the financing to purchase the home, you will need to have an earnest money deposit (money that you put down on the house when making the offer, we’ll get to the offer a little later) which is typically in the amount of $500-$1000. This money will go towards your closing costs (money you will need to close on the home, we’ll get to that later too). Closing costs typically run about 3% of the cost of the property. So if you’re buying a $200,000 home, closing costs will be around $6,000. Oftentimes your real estate agent can assist in getting some if not all the closing costs paid for you, by the Seller. Your lender can also sometimes get some of the closing costs included in your loan (discuss this with your lender at the time you apply for the loan). It’s important to get completely approved for a loan before looking at homes so you know that you both qualify for the loan, and that you’re only looking at homes that fall within your particular price range.
2. Find a great real estate agent
Now that you’ve got the money secured to pay for your new home, it’s time to find a great real estate agent. A great real estate agent is one that first and foremost operates with integrity at all times and has extensive knowledge of real estate as well as the area you’re interested in purchasing. A great agent listens to what type of property you’d like and works within your desired price range. They respond in a timely manner to your calls, emails and texts and will be with you every step of the way from the beginning to the end.
3. Start looking at homes
You and your real estate agent will have an in depth conversation of the features you need in a home (number of bedrooms, bathrooms, neighborhood, style of home, etc.) and the things you want in a home (hardwood floors, granite countertops, etc.) Your real estate agent will show you properties that fall within your allotted price range with the features that you’re interested in. This is the fun part :).
4. Submit an offer
Once you find a home that you’d like to buy, your real estate agent will put together an offer (the contract) to be submitted along with the earnest money deposit, to the Seller, or the Seller’s agent. Once submitted, your offer will either be Accepted (they accept your offer as is), Rejected (the Seller out right rejects your offer), or Countered (they will return your offer back to your agent with changes). Once an offer has been accepted by all parties and is ratified (signed by all parties involved) the next step is….
5. Order inspections
There are two inspections ordered after the contract is ratified. One is mandatory and the other is optional, although it is my strong recommendation that both be ordered. The first one, which is optional, is a home inspection. The home inspection, which is paid for by the Buyer (cost depends on the square footage of the home and is usually between $400-500 for the average home). The inspection is conducted by a home inspector/company that conducts an inspection of the entire house. It will tell you the approximate age of the roof and the systems of the house (HVAC, water heater, etc.) and numerous other items regarding the condition of the home. In my opinion this is some of the best money spent as it affords you the knowledge of the condition the house is in. As we all know, everything that looks good, isn’t necessarily good for you. If the house is found to have some issues that you are not comfortable with and the Seller is not willing to make the repairs (a lot of times the Seller will make the repairs) then you are able to walk away from the deal and your earnest money deposit will be returned to you. I can not say this enough, get a home inspection!!!
The second inspection, which is mandatory, is the termite and moisture inspection. This is an inspection that checks for exactly what it says. It checks to see if the home has termites, damage from termites or any moisture issues. The inspection is usually paid for by the Seller, however, I advise my clients to pay for it themselves (it usually costs under $100.). That way, you (the Buyer) can choose the company to do the inspection and if any damage is found, the report is submitted to the Seller for repairs before closing.
6. Appraisal
After the inspections have been completed and are satisfactory with all parties the next step is for the lender to order an appraisal. The lender does not want to finance (nor do they want you to pay for) a property that is not worth what you’re paying for it. An appraiser (ordered and assigned by the bank) goes out to the property to assess the value of the property to ensure it’s worth the purchase price (sometimes it’s worth more than what you’re paying for it and you have instant equity in the home, which is a great thing). The appraisal is paid for by the Buyer outside of closing and is usually around $500.
7. Closing
After the appraisal has been completed, then it’s time to close! This is the time when you will meet at either an attorney’s office or a title company (I recommend using an attorney, because they can make legal changes if necessary to documents, whereas a title company can not) to close. You will be required to sign quite a few documents, after which you will be given the keys to your new home, and whalla you’re now a homeowner!
Ownership is truly everything!
Andrea :)
