Homebuying 101

So you are finally ready to buy a home (at least you think you are). Let's go over the home buying process from start to finish.

The very first thing to do is to get pre-approved by a lender. Make sure that the lender you chose participates in a multitude of programs and is very knowledgeable in each of them. Some lenders excel in certain areas and not so much in others. There are many different loan types out there and your lender should be trying to get you in the one that best suits your needs.

The approval is so important for many reasons. One, you know what your price limits are, how much your monthly payment will be, and how much money will be required at closing. Why would you fall in love with a house only to find out you cannot qualify for it? That's is just torture! Another reason is that the seller wants to know that if they take your offer, you can actually buy it. They will not select an offer without proof that you have the ability to see it through (another reason to have a GREAT lender- some bad apples can actually harm your offer to purchase if they have a bad reputation). 

So now that you are approved, contact an real estate agent. There is no harm in having an agent represent you. Typically, the seller will be paying the buyer's agent for bringing them to the transaction. You may have to pay a small transaction fee at closing, but each agency is different.

Tell the agent your wants and must haves. When you start looking, think about what you would like to have (i.e. swimming pool, 3 car garage, etc) and what you need to have (3 bedrooms, 2 bathrooms, etc). Think about the areas you would or would not like to live in. Remember- an agent cannot tell if it is a "good" area or how the schools rank. That is information you need to discover on your own.

Once you find the "one", you will need to remember a few key things. More than likely, you will need an Earnest Money Deposit (or EMD). This is to show the seller that you are serious and if you decide to walk away for no contractual reason, they can keep the deposit. The amount down is up to you, but the more skin in the game, the better. If you close on the home, the deposit goes toward the closing costs. This money is due immediately upon the signed contract.

You will also want to hire a home inspector to walk through every nook and cranny of the home. This is usually done within the first week after the purchase agreement is signed by all parties. The cost of a home inspector varies, but your agent should be able to give a good idea of the cost in your area. They work for you. They are supposed to find things wrong, it's their job. Just don't fret over the small things. Focus on the major items of the house.

After the inspection, you will need to have the home appraised. This is for your (and the bank's) best interest. You don't want to buy a home that's overpriced. You will also know if it is a great deal and you already have equity in the home from day one. This process can take anywhere from one to three weeks depending on the loan type and appraiser.

After the appraisal comes in (assuming it is good), you will finish up your loan process with the lender. This can take a couple more weeks to process all of the documents and get the final approvals. All in all, the typical mortgage process takes 30-45 days.

You heard the magic words... CLEAR TO CLOSE! Before you celebrate too much, don't overlook the final walk through! This is extremely important. If you don't look right before closing, you take the risk of assuming the property as is. So if the heat went out the night before and you didn't check before signing the closing documents, that is your problem now. Don't skip this step!

If all is well after the final walk through, well congratulations you just bought your new home! Enjoy and make many wonderful memories!

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