I’m sitting in my office making a list of posts for this coming season, and it hits me. Get back to the basics. Yes, let’s start the year by going over home buying fundamentals, or, as I like to call it home buying 101.
Buying a home is one of those moments in life that’s right up there with getting married, having a baby, or getting a new job. It’s exciting and terrifying at the same time!
It’s one of the biggest purchases you’ll make in your lifetime so it’s important you have a basic understanding of the process and know what to expect. It’s always interesting to me that people distinguish “First time home buyers” as though they are different from other home buyers. They aren’t. If you are getting a loan to buy a home from a lender then the following is applicable to you.
Finding a lender: You decide you want to buy a home, upsize, downsize, any size. You and your real estate broker, helping you find a home, will need to know your budget and your financial health. This all begins with a conversation with a lender. Its valuable to actually talk with a lending agent you trust, can ask questions of, and will be a great communicator. Once you really look at your finances there may be some finance repair that needs to happen before securing a home loan. First time home buyers will especially run into this, but it’s a great exercise in financial awareness and health. A good lender will coach and prepare you for your home buying goal. Mortgage rates and closing costs aren’t the same for every lender. Shop around and get multiple quotes. You want to make sure the rate you are getting is competitive. Heck, you can use the loan offer from one lender to help you negotiate better terms with another mortgage company. It’s worth checking (Google it) to see if you are eligible for any grants or assistance as a first-time buyer.
Get pre-approved before you start your search:
Do whatever you can to make sure your credit score is the best it can be before you start this process. It doesn’t take long to get pre-approved (literally, minutes) but it can make all the difference to a seller. A potential lender will need a few documents to validate your income, assets and credit. It’s a little work upfront, but it’s worth it. In a tight market, sellers may only consider potential buyers who are pre-approved.
Choose the right real estate agent:
Every realtor has their strengths and weaknesses. Some have specialties others don’t. Do you want a great negotiator? Someone who will be patient with every question you ask? Maybe you want a realtor who specializes in a particular part of town? Check out realtor reviews. Talk to people you know to get their feedback based on their experience. I so believe in my ability I’m happy to let you talk to any former clients!
Choosing the right house:
With so many options to look at a house before you actually ‘see’ it, it’s important to narrow your search to what you really want/need so you don’t waste your time and your realtors looking at homes outside your price range or that don’t really fit your lifestyle. If your budget doesn’t fit your dreams, that’s ok. Think of your purchase as a step towards your home ownership dreams. Think out of the box. Look in neighborhoods you hadn’t considered but have a great upside. Think about a town home instead of single family home. When you look at descriptions and photo’s consider how much you are willing to update/fix. What are you willing to compromise on and what is a deal breaker? Where there is a will and a budget there is a way to find a home that you will love and be a good investment. Always do your research and talk to your broker about housing trends and smart buys.
Make an offer: Once you have found the property you want, you will make an offer. Once you and the seller agree on terms like sale price and the offer is fully signed (executed) by both buyer and seller, you are now under contract. This is when your Due Diligence period begins.
Get a home inspection:I just renovated a historic home and I can tell you that you will find something wrong with the house you are looking at. The question is, is it anything to worry about? A home inspection is imperative to ensure you know what you are getting into before buying a home.
Home inspections, appraisal, and loan approval really should happen during this “due diligence” period. If any of these aspects uncovers an issue i.e. needed repairs or lender’s appraisal is lower than contract price, it’s time to go back to the table and re-negotiate. Hopefully buyer and seller come to terms. If not…this situation is another and separate post. You are through the Due Diligence period on onto Closing.
Be prepared for closing: Make sure you have all the proper documents. The closing is you, the buyer, signing final lending documents, including allowing the transfer of money for your down payment and closing costs to closing official, usually an attorney in N.C.. The lender also takes care of transferring money to seller or seller’s bank paying off their loan. The Buyer also signs the deed. The closing official has already done a title search (*note to self: another post) and located and resolved any outstanding issues. Once the money is transferred the Deed is recorded at the Records office and you, the buyer officially owns the home.
Buy a bottle of champagne (or wine) you’ll want to celebrate after all this!
I have helped so many buyers navigate the sometimes overwhelming process of buying a home. Don’t hesitate to reach out if you have questions. You can contact me at firstname.lastname@example.org