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Steps To Buying A Home From Start To Finish
Dated: January 12 2016
Step 1: Check Your Credit Repor t and Credit Score
Before getting a mortgage or any kind of loan, you should always check your credit report According to most states, you're allowed to receive one free copy of your credit report per year. Scores range from approximately 300 to 850; generally, the higher your score, the better loan you'll qualify for.
Step 2: Figure out How Much You Can Afford
You can calculate how much you can afford by starting online with a mortgage calculator. Don't forget to factor in money you'll need for a down payment, closing costs, fees (such as fees for an attorney, appraisal, inspection, etc.) taxes, HOA or condo fees. Remember that you don't always have to put down 20 percent as your parents once did. There are loans available with little to no down payment and I can help you find a lender that meets all of your needs.
Step 3. Making an offer
You’ve found the perfect home and now it’s time to make your move. This means writing up a formal purchase offer and signing a real estate contract. Even though it’s early in the buying process, you still must sign a legally binding contract. Keep in mind you can add contingencies to the real estate contract such as a home inspection, appraisal and mortgage contingencies; just to name a few. Such contingencies enable a buyer to opt out of the contract if unexpected problems or concerns pop up.
Step 4. Disclosures
In most states, sellers are legally required to provide buyers with property disclosure statement. In this statement, legally the sellers must disclose any known issues that might affect the property’s value or habitability. If there have been leaky windows, violations from the city, work done without permits, plans for a major nearby development, etc., the seller must disclose this informatioin. If something is disclosed here that is a negative factor for you, it is your “out” of the contract.
Step 5. Inspections
As part of the real estate contract, you have the right to elect different inspections. The most common is a “general” property inspection, in which a licensed inspector checks the home from the foundation to the roof and investigates all major systems and components. As the buyer, you should follow along with the inspector to learn more about the property. Carefully listen to the inspector as this is your chance to examine the property from top to bottom. If issues arise, you may be able to negotiate to have the seller fix and/or issue a credit for the repair. If something major arises and it’s not what you signed up for, you can exit the contract via your inspection contingency.
Step 6. The appraisal
Most buyers put a certain amount of money down toward the purchase price and the balance usually will come in the form of a bank loan, unless you are paying cash. A bank will not issue a loan without due diligence; so an appraisal is the financial institution’s way of making sure the contract price is the right price. The appraisal also insures the buyer that they are not over paying for the property. In this process, the lender will send out a third-party appraiser, which the buyer pays for, to confirm that the contract price is in line with the neighborhood’s comparable sales. If it’s not, the bank can deny the loan or change the terms.
Step 7. Loan approval or commitment
In addition to making certain the property appraises at no less than the contract price, the bank will want to fully approve your credit, debt and income history. The bank will also want to approve the property’s preliminary title report to make sure there are no liens recorded against the property that might affect its value. The bank can take up to 30 days to complete its review, which should result in a loan commitment or full loan approval. Once that’s completed to the bank’s satisfaction, you’re guaranteed a loan, and you’re one step closer to closing.
Step 8. Final walk-through
Just before closing, you and your realtor will walk back through the property to make sure it’s in the condition it was when you last saw it. Make sure the seller didn’t remove any fixtures, damage anything, make modifications or leave behind garbage or debris. You also want to make sure that all repairs from the home inspection that you have negotiated with the seller to repair have been completed properly.
Step 9. The closing
The closing may happen at an attorney’s office, Realtor’s office or a title company with the presence of an escrow officer. In some instances, the buyer or seller may not even be present as long as all documentation and protocol have been executed properly prior to settlement. Regardless of how a closing happens, if you’re a buyer and getting a loan, plan on signing dozens of documents at closing. You’ll need to show photo ID, as your signature will be notarized. Prior to the closing, your real estate agent, attorney or escrow officer should send over a closing statement to review. The statement details your final closing costs and the money you need to bring to the closing. The funds can be wired in or paid with a cashier’s check on closing day. Be sure to ask for the statement early, so there aren’t any last-minute surprises.
Step 10. Move In and celebrate! You've got your mortgage, closed the deal and now it's time to move in! Congratulations!
If you are thinking of buying or have any questions regarding the home buying process please do not hesitate to Contact Me!
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