We divided the home buying process into a few stages: finances, search, offer and negotiations, inspection period, financing period, and preparing to close.
The Home Buying Process at a Glance
1. Finances
- Obtain a financial pre-approval (proof of funds for cash purchase).
- Prepare for additional costs.
2. Search
3. Offer & Negotiations
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Write an offer to purchase your favorite property.
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Negotiate the terms of the offer.
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Accept the contract.
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Deposit Escrow (deliver, mail or wire) within 3 days.
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Complete Loan Application within 5 days.
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Obtain Homeowners Insurance quotes.
4. Inspection Period
5. Financing Period
6. Preparing to Close
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Title company will conduct a title search and order survey.
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Receive closing statement/clear to close.
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Wire funds to the closing company.
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Conduct a final walk-through of the property and close.
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Closing day: Get your keys, it's all yours!
1. Finance
Finance
A mortgage lender will be able to take your financial information and determine what amount you will be able to borrow. having your preapproval letter in hand before we start searching will save us time and make sure we don’t miss out on the perfect home opportunity. The preapproval letter will accompany an offer.
Cash
If you’ve got the money in the bank and you are ready to purchase your home in cash, that’s great. I will inform you of your closing costs and we will need proof of funds to supplement any offers. You can acquire proof of funds from your financial advisor or your banker to show that you have a balance that meets the purchase price.
2. Search
Once you’ve got your finances in order, the fun of looking for the perfect home begins! I will set you up on an automatic search through the Multiple Listing Service (MLS), which is the database that Realtors use to list and search for homes. The moment a home that fits your search criteria is listed for sale, it will be sent to your email inbox. If we ever need to adjust the search criteria, just let me know and I can make any change you need. Make sure to let me know which homes pique your interest and we will set up some showings.
Questions to Ask Before Searching for a Home
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Where do you want to buy it?
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Is there a specific school district you’d like to be near?
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Are you interested in new construction or a resale home?
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What style of home would you prefer?
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Are stairs acceptable?
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Do you want a garage?
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What size lot would you prefer?
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Pool or no pool?
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Would you like a patio or deck?
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Is a guarded gate important to you?
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What 3 features of a home are most important to you?
3. Offers & Negotiations
In order to write an offer, we will need the following information:
- Pre-qualification letter or proof of funds.
- Offer price: I will help you determine the property’s fair market value
- Escrow deposit: Usually 1-2% of the purchase price.
- Financing amount: What percentage of the loan are you financing, and how much you are putting down.
- Closing date: If getting a mortgage, this is typically 30-45 days from acceptance of the offer. This will be the day the keys are handed from seller to buyer.
- Inspection period: Typically the buyer shall have 15 days, unless otherwise stated on the contract, to perform inspections on the home and terminate or renegotiate the contract if the inspection comes back unacceptable.
Escrow Deposit
What is The Escrow Deposit?
The escrow deposit is also known as “The Good Faith Deposit.” It is typically 1-2% of the purchase price that you put down upfront to show the seller you are serious about the purchase. The higher the escrow, the more attractive the offer is to the seller.
Where Does it Go?
As soon as we have an executed contract, you have approximately 3 days to get the Escrow Deposit to the title company. The title company holds it up until closing, then it will be counted towards your balance due at closing. You can submit your escrow deposit by check, cashier’s check, or wire transfer.
4. Inspection Period
During the inspection period, the buyer has the right to hire a professional to inspect the condition of the home. The inspection will uncover any issues in the home that would have otherwise been unknown.
The standard home inspector’s report will cover the condition of the home’s heating system; central air conditioning system; interior plumbing and electrical systems; the roof, attic and visible insulation; walls, ceilings, floors, windows, and doors; the foundation, basement and structural components. You will receive a written report of the inspection. You may be present for the inspection if you would like to ask the inspector any questions.
Additional inspections you may need:
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A four-Point Inspection may be required by your homeowner’s insurance if the home is more than 30 years old.
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WDO Inspection Ask your lender if your loan requires any certain inspections such as a Wood Destroying Organism (WDO) inspection.
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Lead-Based Paint Inspection If the home was built prior to 1978, a lead-based paint inspection is recommended.
5. Financing Period
Appraisal
An appraisal is an estimate of the value of the property by a licensed professional appraiser. Once any problems during the inspection are solved, the appraisal will be ordered by the lender and paid for by you. The goal of the appraisal is to verify the value of the property for the lender and to protect you from overpaying. The contract is contingent upon whether the appraisal comes in at or above the purchase price. If the appraisal comes back short, we will be back at the negotiating table.
Obtaining a Mortgage
You have 5 days from the date of contract execution to begin the mortgage loan application. During the 30-45 days before closing, the lender will be finalizing your mortgage. It is very important not to make any major job changes, major purchases, or open new credit cards or lines of credit, as any of these activities could alter your qualifications for a loan. Don’t buy furniture until after closing!
Home Insurance
Your lender will require you to obtain a homeowner’s insurance policy. You will need to get the lender this information before closing. Feel free to call my recommendations below for quotes.
6. Preparing to Close
Survey
Unless the seller already has a recent & acceptable survey of the property, the buyer is required to pay for the survey. This will be in your closing costs. The title company or I will order this for you. The survey is a sketch showing a map of the property lines /boundaries among other things. The survey will show if there are any encroachments on the property.
Title
The title company will conduct a title search to ensure the property is legitimate and find if there are any outstanding mortgages, liens, judgments, restrictions, easements, leases, unpaid taxes, or any other restrictions that would impact your ownership associated with the property. Once the title is found to be valid, the title company will issue a title insurance policy that protects lenders or owners against claims or legal fees that may arise over ownership of the property. This will also be a part of your closing costs.
Clear To Close
“Clear to Close” is excellent news. It means the mortgage underwriter has officially approved all documentation required to fund the loan. All that remains is the actual closing process. Here is a checklist to ensure a smooth closing.
Smooth Closing Checklist
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Make sure you've obtained` homeowner's insurance and provide the lender with the information.
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Review the closing settlement statement a few days before closing to ensure you have the funds for closing costs.
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Final walk-through.
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Wire funds to the closing company.
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Bring your driver's license or passport to the closing table
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Take your keys and move in!
New Construction Guide
