Let’s have some fun today learning how to buy your new home!
In Monopoly, the name of the game is to buy real estate. It seemed like the perfect vehicle to help explain the process of buying your home.
The road to homeownership is not a long one, but it does have a few key steps that you have to go through to get to the closing table and into your new home. Here are the key steps you will take along the way.
Getting pre-approved before you go look for a home is so important! If you find your dream home, the seller will expect to have a lender’s pre-approval letter included with your offer. Not having a lender letter could cost you the home of your dreams in a multi-offer situation.
Decide what your “Must Have’s” are, and make a list of your “Absolutely Not!” items as well. This will help us narrow down the list of homes for you to look at. You don’t want to waste your time looking at homes that you wouldn’t dream of living in, right?
If a big yard tops your list of must have’s, you likely won’t end up purchasing a town home with no outside space. If instead you don’t want to do any yard work, that townhouse just started looking really good!
When you make an offer, you decide what the price and terms are that you want to offer to the seller. Having your lender pre-approval letter is key at this point, as many sellers will require it before even looking at your offer.
It’s a good plan to make your highest and best offer the first time, or very close to it. We have been in a seller’s market lately, and many properties have multiple offers coming in. The offer that works the best for the seller is usually the one that is accepted – and that’s not always the highest price. Closing date, contingencies, and ability to perform (get the necessary loan) all play a part in getting your offer accepted.
You will need to hire an inspector (we have a list of inspectors we recommend if you need one). They will check out the property and see if there is anything that is damaged or needs repaired prior to closing. If they find anything major, we recommend having a specialist take a look and verify what needs to be done.
It’s time to hire an appraiser! This is typically done by the lender (unless you are paying cash). They will inspect the property and give their opinion of the value of the property based on the current market. The appraisal is usually ordered after the inspection has been resolved, so that you don’t have to pay for an appraisal if something major comes up that keeps you from purchasing the property.
Depending on the loan program you are using, items called out in the appraisal may be required to be fixed before you can close. If the price from the appraiser is way off, you may be able to ask for an adjustment either from the appraiser (in case they overlooked something) or from the seller. They may be willing to meet you partway in between the appraised value and the contract price.
It’s not as scary as it sounds – we promise! The underwriter looks over the file, verifies that everything is what the lender expected, and gives final approval for the loan. They may occasionally ask for clarifying documents or information, and it is super important to get this information back to them as soon as you can.
It’s almost time to celebrate! The lender has given their OK for the closing to happen and the funds are ready to be transferred over. If you haven’t already, it’s time to schedule your closing. You are almost the owner of your new home!
It’s not time to make any big purchases yet though – wait until after you sign all your documents and own your new home before you open any new lines of credit, but a car or furnishings, or make any big expenditures. Any of these things could mean you can’t close on your new home – and that’s a terrible thing to have happen.
NOW it’s time to celebrate! At closing you will sign all the documents required by your lender, the real estate commission, and the title company. The title company’s closer will go through all of the documents with you (there is one that we have to sign too), and once everything is signed and the funds are verified, you will get the keys to your new home!
Congratulations! Don’t forget to have your photo taken with your new keys!
If you need a list of people to contact for any of the above steps, just ask! We have been working in the Grand Valley for over 40 years and know a lot of people within the housing industry. We have lists of people to recommend for almost anything you may need from lenders to inspectors to title companies to specialists for further inspections. Part of our job is making the process of purchasing your home as easy and painless as possible for you.
If you have any questions about the process, or are ready to start looking for your new home, give us a call! We love helping people find – or design! – their perfect home!
This is part of our Real Estate 101 series, explaining the process of buying or selling your home.
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