Buying a home is the largest purchase most people will ever make. Homeownership has great benefits. Homeownership also comes with certain responsibilities.
Keys to Smart Home Buying
When you do find your perfect home, you may need to act quickly. That's why it's a good idea to make sure you have all your financial arrangements in order beforehand.
Before you start shopping:
Getting Your Mortgage Application Started
Shop for different Lenders by comparing Lender service fees, loan origination fees and interest rates, complete an Application and then compare these fees.
Being pre-approved by a lender is the first step in starting your home buying process because it shows the seller that you are a committed buyer and financially capable of buying the property.
Keep in mind that pre-approval is different from pre-qualification. Pre-qualification is merely an estimate of what you may be able to afford. Pre-approval occurs when the lender has reviewed your credit and believes that you can finance a home up to a specific amount. However, neither pre-approval nor pre-qualification represents or implies a commitment on the part of a lender to actually fund a loan.
The Search Begins after you and I have received the Mortgage Pre-approval Letter
What if the Property is Distressed?
Sometimes, a home might hit the market at a bargain price due to previous financial problems. While you might be excited to "get a deal" on a property, there could be issues with the transaction and/or the property itself.
If a property is foreclosed, the ownership then transfers to the bank or lending company that financed the previous mortgage. In addition, the property is sold “As-is” meaning that the buyer accepts the property in its current condition. Also, in most cases the utilities will be turned off and will need to be turned on at the buyer’s expense for the property inspections during the inspection period.
Distressed properties can present a higher risk of title defects, so buying an owner's policy of title insurance at the time of purchase is important.
Understanding the Asking Price
Many factors influence the price that a seller expects to get for their home. While only you can decide how much you feel comfortable offering for a property, we can gather critical information for you regarding the factors that impact how much you should consider paying for the home.
Negotiating the Offer and the Contract
You may make your offer subject to certain terms or contingencies, including securing of financing or perhaps the sale of your current home. You may also make the contract subject to various inspections by both you and professional inspectors. Most contracts include some standard provisions, such as property taxes, insurance costs and special assessments, which will be prorated between buyer and seller. Others outline what happens if the property is damaged before closing, or either party fails to go through with the sale. I will review with you every aspect of your offer. Together, we will plan a strategy for getting the most advantageous terms for you - the buyer - at the price you are willing to pay for the property.
Financing Your New Home
The financing process can take anywhere from 35 to 45 days. I'll be involved throughout the process to help it run smoothly.
Inspections during the Option Period
The two most common types of inspection are:
2. General House Inspection
Title Search Process
Homeownership has many advantages - both financial and personal. But buying a home is an important decision. Look at the benefits and the differences between homeownership and renting to better understand if owning a home is right for you.
What are the benefits of homeownership?
To get a quick idea of what you can afford to spend, multiply your annual gross income (before taxes) by 2.5. For example, if your annual household income is $50,000, you might be able to qualify for a $125,000 home. This is just a rough estimate - the actual number will vary based on factors such as your debt and credit history.
Mortgage lenders typically use the housing expense and debt-to-income ratios to more accurately determine how much you can afford to spend on your mortgage.
A mortgage lender, a housing counselor, or consumer credit counselor can help you better understand these guidelines. Before you talk to a financial professional, you can organize your financial picture by creating a budget. Don't forget that you also have to save for the down payment, closing costs, inspections costs, moving, and other related expenses.
The Excitement of Buying Property
Buying a home is an exciting and complex adventure. It can also be a very time-consuming and costly one if you're not familiar with all aspects of the process, and don't have all the best information and resources at hand.