Buying A Home
Why buy a home?
Although there are many good reasons for you to buy a home, wealth building ranks among the top of the list. We call home ownership the best “accidental investment” most people ever make. But, we believe when it is done right, home ownership becomes an “intentional investment” that lays the foundation for a life of financial security and personal choice. There are solid financial reasons to support your decision to buy a home, and among these, equity buildup, value appreciation, and tax benefits stand out.
Base your decision to buy on facts, not fears.
- If you are paying rent, you very likely can afford to buy.
- There is never a wrong time to buy the right home. All you need to do in the short run is find a good buy and make sure you have the financial ability to hold it for the long run.
- The lack of a substantial down payment doesn't prevent you from making your first home purchase.
- A less-than-perfect credit score won't necessarily stop you from buying a home.
- The best way to get closer to buying your ultimate dream home is to buy your first home now.
- Buying a home doesn't have to be complicated - H Realty and many other trusted professionals will help you along the way!
How do I secure financing?
While you may find the thought of home ownership thrilling, the thought of taking on a mortgage may be downright chilling. Many first-time buyers start out confused about the process or nervous about making such a large financial commitment. From start to finish, you will follow a six-step, easy-to-understand process to securing the financing for your first home.
Six steps to Financing a Home:
- Choose a loan officer/mortgage specialist - H Realty recommends getting quotes from 2-3 lenders to compare rates/fees/etc.
- Make a loan application and get preapproved - it's easier than you think and most lenders offer online application.
- Determine what you want to pay and select a loan option - lenders will assist you with this decision based on your needs.
- Submit to the lender an accepted purchase offer contract and any other supporting financial documentation they request.
- Get an appraisal and title commitment - your lender and attorney will handle these items on your behalf.
- Obtain funding at closing - the hard part is done and once you've signed all final closing paperwork, the house is yours!
Why do I need a buyer's agent?
For most people, buying a home is the single largest investment they will make in their lifetime. It is a decision that affects personal finances as well as lifestyle. The typical real estate transaction involves at least two dozen separate individuals - mortgage brokers and underwriters, inspectors, appraisers, escrow officers, buyer's agents, seller's agents, insurance assessors, title researchers, closing attorneys and a number of other individuals whose actions and decisions have to be orchestrated in order to perform in harmony and get a home purchase completed. Sound complicated? It is, but don't worry! It is the responsibility of your real estate agent to expertly coordinate all the professionals involved in your home purchase, act as your advocate, and pursue your best interests each step along the way. Without an exclusive buyer's agent, you are what the industry calls an "unrepresented" buyer, on their own in the transaction without an agent to protect your financial interests and assist you with the following...
Seven main roles of your real estate agent:
- Educates you about the current market environment and buying strategies.
- Analyzes your wants and needs to ascertain what home would truly be the best fit.
- Guides you to homes that fit your criteria and grants you access to view properties.
- Negotiates all terms on your behalf to ensure you get the best possible deal.
- Coordinates inspections, repairs, and the work of other needed professionals.
- Checks and double-checks all paperwork and deadlines to keep closing on track.
- Identifies and solves any problems that may arise during the contract period.
What goes into making an offer?
When searching for your dream home, you were just that - a dreamer. Now that you're writing an offer, you need to be a business person. You need to approach this process with a cool head and a realistic perspective of your market. The three basic components of an offer are price, terms, and contingencies. The right price to offer must fairly reflect the true market value of the home you want to buy. Your agent's market research will guide this decision.
Terms - the other financial and timing factors that will be included in the offer:
- Due diligence and earnest monies - the due diligence fee compensates the seller (non-refundable) for the time you have the house under contract to perform your due diligence; the earnest money (refundable) and makes a statement about the seriousness of your offer and is held in escrow until closing
- Schedule - a due diligence period and a final closing date are negotiated and provide a timeline for the transaction
- Conveyances - items that may stay with the house when the sellers leave; ie, refrigerator and washer/dryer
- Closing costs - it's standard for buyers to pay their closing costs, however if you want to roll the closing costs into the loan, you will need to write that into the contract
- Home warranty - this covers repairs or replacement of appliances and major systems - you may ask the seller to pay for this
New construction - Do I still need an agent?
Whether to buy an existing home or have one built is yet another decision to make during the home-buying process. If you decide to go with new construction, you will without question need a buyer’s agent knowledgeable in new construction to help you select a reputable builder, negotiate a fair contract for you, and provide ongoing consultation throughout the process. From building restrictions, roads and easements, inspections, warranties, rebates, and more; there are a lot of things to consider when buying a new home and you will need someone in your corner.
Your realtor will be a powerful advocate providing a wide range of information to assist you with the decision making process and negotiating on your behalf the price, upgrades, move-in date, and other terms with the home builder. Keep in mind, the goal of the builder's agent is to sell you a home and is legally obligated to represent the builder and his interests. Avoid being an unrepresented buyer and protect your future investment by hiring a professional.
How do I find the right home?
You may think that shopping for homes starts with jumping in the car and driving all over town. And it's true that hopping in the car to go look is probably the most exciting part of the home-buying process. However, driving around is fun for only so long if weeks go by without finding what you're looking for, the fun can fade pretty fast. That's why we say that looking for your home begins with carefully assessing your values, wants, and needs. Before the home search begins, your real estate agent will want to know as much as possible about the features and amenities you desire. To help your agent better serve you, take some time to consider what you want and need in a home before meeting with your agent for the initial consultation.
H Realty's guideline to creating the foundation of your home's wish list:
- Age: Do you prefer historic properties, or newer ones? Any particular decade?
- Style: Do you have a special preference for ranches, bungalows, or another style of construction?
- Square feet: How much space is too little? How much is too much?
- Bedrooms: How many and for what purposes? Bathrooms: How many and what kind?
- Living and Dining Areas: A traditional, formal layout, or a more open, contemporary plan?
- Kitchen: How big? Recently updated? Open to other living areas?
- Extras: Attic or basement? Office? Bonus room? In-law suite?
- Storage: Big closets, a shed/workshop, an extra-large garage?
- Exterior: Patio, deck, or porch? Wooded lot? Fenced in yard?
- Parking: A garage or carport? Street parking? Room for how many cars?
- Condition: Do you need a move-in ready home or are you willing to do some work?
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What happens during the due diligence period?
What happens during the due diligence period?
What happens during the due diligence period?
Unlike most major purchases, once you buy a home, you can't return it if something breaks or doesn't quite work the way it should. That's why property inspections, home owner's insurance, and a home warranty are such important tools to be implemented!
Property inspections should expose any issues a home may have and gives you the opportunity to know exactly what you're getting into before you sign your closing papers. The inspector will report every single finding but do not sweat the small stuff. Most items that show up on an inspection report can be easily remedied and you will have the opportunity to negotiate any needed repairs with the seller. Your major concern is extreme structural damage. If you have a big problem show up in your inspection report, you will want to bring in a specialist - remember knowledge is power. If the best-case scenario turns out, you have peace of mind. If the worst-case scenario turns out to be true, you have the choice to walk away from the purchase.
A home insurance policy is required if you have a mortgage on the property.
- Covers damages to the structure of the house and it's contents due to hazards/crime
- Provides protection from liability in case someone sustains an injury while on your property
A home warranty policy is optional but recommended for people who have aging systems/appliances.
- Covers the major systems and appliances in your home
- Covers damages due to wear and tear over time
What occurs prior to and during closing?
What happens during the due diligence period?
What happens during the due diligence period?
The final stage of the home buying process is the lender's confirmation of the home's value and legal statue, and your continued credit-worthiness. This entails a survey, appraisal, title search, and a final check of your credit and finance. Your agent will keep you posted on how each is progressing, but your work is pretty much done.
You just have a few pre-closing responsibilities:
- Stay in control of your finances.
- Return all phone calls and paperwork promptly.
- Communicate with your agent at least once a week.
- Several days before closing, confirm with your agent that all your documentation is in place and in order.
- Obtain certified funds for closing.
- Conduct a final walk-through.
On settlement day, with the guidance of a closing attorney and your agent, you'll sign documents that do the following:
- Finalize your mortgage.
- Pay the seller.
- Pay your closing costs.
- Transfer the title from the seller to you.
- Make arrangements to legally record the transaction as a public record.
As long as you have clear expectations and follow directions, closing should be a momentous conclusion to your home-searching process and commencement of your home-owning experience!
I have keys... now what?
What happens during the due diligence period?
I have keys... now what?
Now it's time to protect your investment! Be sure to perform routine maintenance on your home's systems and watch for signs of leaks, damage, and wear (fixing small problems early can save you big money later). Attention to your home's maintenance needs is essential and an ongoing relationship with your realtor will bring great benefit to protecting the long-term value of your investment.
Your realtor will be able to:
- Offer insights regarding your first tax return as a home owner.
- Provide guidance for maintaining and increasing your home's value.
- Recommend contractors to help with home maintenance or remodeling.
- Keep track of your home's current market value.
- Assist you with the sale of your home when the time comes.
- Help your family and friends buy, sell, or invest in real estate
ENJOY YOUR BEAUTIFUL NEW HOME!
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