Step by Step Buying Process
Step 1. Get Pre-Approved |
Step 5. Inspections |
Step 1. Get Pre-Approved
Just to clarify, getting pre-approve and pre-qualified is the same thing. In this step you find out what you can qualify for based on your credit score and/or income, employment, and assets. It's important to have in mind what amount of a mortgage payment you can personally afford. If you have a great credit score, sometimes it will allow you to get more than what you can REALLY afford. At this point, it is important for you to set your own limits based on the mortgage payment amount.
The type of program that best fits you will depend on how long you plan on being in your home. If you haven't given much thought, it's time to start. This is most likely your biggest investment in your life so give it some more thought. Some people give more thought to buying a $15,000 car than a $200,000 plus home. Does that make sense? Think long and hard about how long you want to stay in this house? Where is your job going to take you? Do you want to upgrade soon? Do you know how to use your equity to your advantage? Do you realize you have the potential to save yourself hundreds of dollars a month by properly using your equity? There are a lot of neat things you can do with your home and growing equity. It's your responsibility to discover it! Ask me about it. No one else is going to do it for you!
After pre-approval, the loan is put on hold until you find a home.
Step 2. Finding a Home
Now that you're pre-approved, you know how much of a house you can afford. Believe it or not, there is a strategy to buying a home. You want to be in an area with the greatest potential appreciation (rise in home value). Why? If someone were to pay you an extra $5-$10k a year for living in a better area, would you do it? If you answer yes, then you need to be thoughtful in picking a good area with good appreciation. Because when you sell or refinance your home, that's real money you can have according to what your home is worth.
As a realtor, I can send you listings via email. Your criteria for a home (area, price, size, etc.) is entered into a system and it will email you updates or new listings daily so that you will be one of the first to be aware of it. This keeps you updated on the market in a quick and easy way. I love email. If you find anything you like, simply click to email and I will be notified.
Step 3. Contract
Once you find a home you wish to make an offer on, I will sit down with you to write up a contract. Once we completely fill out and sign a contract, it will be sent to the seller. Negotiations start here. They will either reject the offer or counter it. To "counter" means that the seller has made changes to our initial offer and now the ball is in our court. We can counter their counter or accept. This process continues until both parties come to an agreement and sign the contract.
Remeber! Everything must be in writing to make it binding or legal. Verbal agreements in real estate cannot be enforced and therefore if anyone changes their mind, nothing can really be done about it.
Note: There are basic conditions or provisions that are standard for most contracts.
1) Appraised value must equal or be greater than the sales price.
2) Subject to home inspection.
These are general wording of basic concepts. But these are points of concern on the buyers side that the seller should not be opposed to.
Step 4. Back to the Loan
Once a contract is made with both parties in agreement, you go back to your mortgage broker or lender and give them a copy of the contract so they can proceed and finalize the loan.
Step 5. Inspections
With the contract in place and the loan in process, any inspections will have to be scheduled by either you, the realtor or lender. The three main inspections are as follows:
Appraisal: This is an inspection to determine the market value of a home. This is used by you and your lender to make sure the house is worth what you are paying for.
Home Insepction: This inspection is not required by the lender but is highly recommended for every buyer. This inspection will uncover all notable defects of the home both minor and major.
Pest Inspection: The the state of Florida, a seller is required to have a WDO (Wood Destroying Organism) Inspection with every home sale. This is more commonly known as a termite or pest inspection, but it includes anything that destroys wood such as mold, fungus, termites, etc.
Step 6. Post-Inspection
If there are any items of repair or concerns that were noted in the WDO or home insepction, the buyer submits to the seller in writing the requested repairs. Refer to the agreement regarding repairs in the contract.
In regards the appraisal, if the value meets the sales price, most likely, all is well. If it doesn't, contact the appraiser to find out details. If you disagree, give supporting evidence for the value of the sales price or seek other professional advise. If the appraised value still does not meet the sales price, then negotiations open up between buyer and seller.
Step 7. Closing
A closing date is typically set in the inital contract. If everything goes well and you make it to the closing with financing in line and all inspection items satisfied, you are ready for closing. This is where the buyer and seller come together and the title, financing, money, and paperwork are all exchanged or handled. Closing is typically held at a title company or attorney's office. At the end of closing, the seller gets their proceeds and the buyer gets the keys. Everything is complete. Congratulations!