1. Are You Ready to Become a Homeowner? Whether you’re becoming a homeowner for the first time or you’re a repeat buyer, buying a house is a financial and emotional decision that requires the experience and support of a team of reliable professionals. While it may be acceptable to snap up a pair of shoes on an impulse, buying a home requires thoughtful planning and decision making. Whether you’re becoming a homeowner for the first time or you’re a repeat buyer, buying a home is a financial and emotional decision that requires the experience and support of a team of reliable professionals including a Realtor, a lender, a lawyer and a range of other individuals. The Dawson Real Estate Group can help you build a strong team around you for a successful transaction.
2. Get a Realtor® In the maze of forms, financing, inspections, marketing, pricing and negotiating, it makes sense to work with professionals who know the community and much more. Those professionals are the local Realtors® who serve your area. Buying and selling real estate is a complex matter. At first it might seem that by checking local picture books or online sites you could quickly find the right home at the right price. But a basic rule in real estate is that all properties are unique. No two properties – even two identical models on the same street – are precisely and exactly alike. Homes differ and so do contract terms, financing options, inspection requirements and closing costs. Also, no two transactions are alike. In this maze of forms, financing, inspections, marketing, pricing and negotiating, it makes sense to work with professionals who know the community and much more. Those professionals are the local Realtors® who serve your area. What to Expect From a Realtor® Once you select a Realtor® you will want to establish a proper business relationship. You likely know that some Realtors® represent sellers while others represent buyers. Each Realtor® will explain the options available, describe how he or she typically works with individuals and provide you with complete agency disclosures (the ins and outs of your relationship with the agent) as required in your state. Once hired for the job, the Realtor® will provide you with information detailing current market conditions, financing options and negotiating issues that might apply to a given situation. Remember: Because market conditions can change and the strategies that apply in one negotiation may be inappropriate in another, this information should not be set in stone. During your time in the marketplace Realtors® will keep you updated and alert you to each step in the transaction process.
3. Get a Mortgage Pre-approval Most first-time buyers need to finance their home purchase, and a consultation with a mortgage lender is a crucial step in the process. Find out how much you can afford before you begin your home search. There’s nothing more frustrating than falling in love with a home and then discovering you can’t afford to buy it. Consulting with a mortgage lender is the first step you should undertake in the home buying process. Almost all first-time buyers need a mortgage to finance their home purchase, so get prepared before you look. When you’re armed with the knowledge of what you can afford, it focuses your search and allows you to make a move when you find a home you love. What Is a Mortgage Pre-Approval? Lenders offer borrowers either a pre-qualification letter or a pre-approval letter, but most Realtors® recommend you get a pre-approval letter before you start home shopping. A pre-qualification letter states the amount a lender thinks you’ll be able to borrow based on your income and credit profile without any actual documentation. However, mortgage lending standards have tightened since the housing crisis, and all mortgage loans now require full documentation and verification of income and assets—so most sellers will only accept an offer from a buyer with a full pre-approval letter based on verified information. Your home hunt will benefit with a pre-approval for two main reasons: First, you’ll have completed the credit check and paperwork requirements for a mortgage, so you’ll know your ability to finalize a home purchase. If the lender finds a problem with your credit or an error on your credit report, you’ll have time to fix it before making an offer. Second, since your documentation will already be in place, a mortgage pre-approval will likely speed up the process once you make an offer. The Dawson Real Estate Group works with highly qualified lenders who we have pre-screened and trust completely. Give us a call and we will connect you with the right lender for you.
4. Look at Homes Once you have the pre-approval in hand you can begin looking for homes with your Realtor®! You can evaluate a home first by looking at photos and a description online. In many cases, homes’ online listings have virtual tours or videos that offer the opportunity to see more. The next step in your house hunt is narrowing down your priorities to find the home that meets your needs. Look at both new homes and existing homes. New homes are sometimes more expensive than existing homes, but they require less maintenance and often have lower utility bills because of their energy-efficient features. We will help you with a full buyers consultation, exploring what features in a home are most important to you. Once you have a clear picture in your mind we will take you to view the homes that meet your criteria. Often our buyers make an offer after seeing only 5-6 homes because we know how to show you only the homes you really want to see.
5. Choose a Home While no one can know for sure what will happen to housing values, if you choose to buy a home that meets your needs and priorities, you’ll be happy living in it for years to come. For first-time buyers and repeat buyers alike, the decision to make an offer on a home is both exciting and a little scary. If your offer is accepted, the place you’ve chosen will be your home for the next several years. Not only should you feel emotionally satisfied by your choice, but you should also feel financially comfortable that you’re buying a home that you can afford and that you feel confident will hold onto its value or hopefully increase in value over the years. While no one can know for sure what will happen to housing values, if you make the choice to buy a home that meets your needs and priorities you’ll be happy to live in it for years to come. Neighborhood or Home Amenities For some homebuyers, living in a particular neighborhood takes precedence over all other priorities, but for others, the home itself matters more. Ideally, you’ll find the perfect home in the neighborhood you love at a price that’s below your budget, but realistically, most people have to make some compromises. You (and your spouse, partner or family) should make a list of what features you want in a home, such as the number of bedrooms, a fenced yard, granite counters in the kitchen, and then rank them in terms of priorities. Think about whether the house or the community matter more to you, and whether it’s worth it to you to make a longer commute in order to live in a home with a larger lot. When to Compromise Once you’ve determined whether the location or the house itself matters most, you may have to compromise on some of your priorities. If the location is the most important factor for your home choice but you find that homes are priced above your budget, you can compromise in several ways:
· Look for a different home type within the community, such as a smaller single family home, a town home or condominium. Decide if you can live with one less bedroom or other features on your list. · Consult with a lender or a financial planner to discuss your options for increasing your budget. While no one should overspend on a home, you should recognize that going $10,000 above your price range when you’re financing your purchase with a 30-year fixed-rate loan will actually add only about $30 to your monthly payment. · Lower your expectations about the condition of the home. While everyone prefers a move-in ready home, you can often get a better deal on a home that needs some cosmetic repairs. Be careful, though, to have a home inspection and to evaluate the structure of the home to see that it meets your needs. Moving walls and adding a bathroom are costly renovations, while painting and replacing appliances are more reasonable. If you have your heart set on a specific home style or a home with a larger yard for your children or to garden, your compromise is more likely to be in the location. If you’re willing to commute farther or perhaps choose a home in a community next to the ‘hot’ neighborhood, you can often find a more affordable home that fulfills your wish list. We will help you determine when and how to compromise and will take the time to show you a variety of alternatives so you can make an informed decision about when to make an offer.
6. Get Funding The cost of financing your home purchase is usually greater than the price of the home itself (after interest, closing costs and taxes are added). Get as much information as possible regarding your mortgage options and other costs. Your lender will advise you on what type of loan is the best fit for you.
7. Make an Offer While much attention is paid to the asking price of a home, a proposal to buy includes both the price and terms. In some cases, terms can represent thousands of dollars in additional value – or additional costs – for buyers. In some cases, terms can represent thousands of dollars in additional value for buyers ? or additional costs. Terms are extremely important and should be carefully reviewed. How Much? You sometimes hear that the amount of your offer should be a certain percent below the seller’s asking price or an amount less than you’re really willing to pay. In practice, the offer depends on the basic laws of supply and demand: If many buyers are competing for homes, then sellers will likely get full-price offers and sometimes more. If demand is weak, then offers below the asking price may be in order. How Do You Make an Offer? Your Realtor® will help you complete an offer sheet that the Realtor® will present to the owner and the owner’s representative. The owner, in turn, may accept the offer, reject it or make a counter-offer. Because counter-offers are common (any change in an offer can be considered a counter-offer), it’s important for buyers to remain in close contact with Realtors® during the negotiation process so that any proposed changes can be quickly reviewed. How Many Inspections? A number of inspections are common in residential realty transactions. They include checks for termites, surveys to determine boundaries, appraisals to determine value for lenders, title reviews and structural inspections. Structural inspections are particularly important. During these examinations, an inspector comes to the property to determine if there are material physical defects and whether expensive repairs and replacements are likely to be required in the next few years. Such inspections for a single-family home often require two or three hours, and buyers should attend. This is an opportunity to examine the property’s mechanics and structure, ask questions and learn far more about the property than is possible with an informal walk-through.
8. Get Insurance No sensible car owner would drive without insurance, so it figures that no homeowner should be without insurance, either. Real estate insurance protects owners in the event of catastrophe. If something goes wrong, insurance can be the bargain of a lifetime. The essential idea behind various forms of real estate insurance is to protect owners in the event of catastrophe. If something goes wrong, insurance can be the bargain of a lifetime. What Kind of Insurance and How Much? There are various forms of insurance associated with homeownership, including these major types: Title Insurance: Purchased with a one-time fee at closing, title insurance protects owners in the event the title to the property is found to be invalid. Coverage includes “lenders” policies, which protect buyers up to the mortgage value of the property, and “owners” coverage, which protects owners up to the purchase price. In other words, owners coverage protects both the mortgage amount and the value of the down payment. Homeowners insurance: This insurance provides fire, theft and liability coverage. Homeowners policies are required by lenders and often cover a surprising number of items, including in some cases such property as wedding rings, furniture and home office equipment. Flood insurance: Generally required in high-risk, flood-prone areas, this insurance is issued by the federal government and provides as much as $250,000 in coverage for a single-family home, plus $100,000 for contents. Local Realtors® can explain which locations require such coverage. Home warranties: With new homes, buyers want assurance that if something goes wrong after completion, the builder will be there to make repairs. But what if the builder refuses to do the work or goes out of business? Home warranties bought from third parties by home builders are generally designed to provide several forms of protection: workmanship for the first year, mechanical problems such as plumbing and wiring for the first two years, and structural defects for up to 10 years. Home warranties for existing homes are typically one-year service agreements purchased by sellers. In the event of a covered defect or breakdown, the warranty firm will step in and make the repair or cover its cost. Insurance policies and warranties have limitations and individual programs have different levels of coverage, deductibles and costs. For details, speak with a Realtor®, insurance brokers and home builders.
9. Closing The closing process, which in different parts of the country is also known as “settlement” or “escrow”, is increasingly computerized and automated. In practice, closings bring together a variety of parties who are part of the real estate transaction. The closing process, which in different parts of the country is also known as “settlement” or “escrow,” is increasingly computerized and automated. In many cases, buyers and sellers don’t need to attend a specific event; signed paperwork can be sent to the closing agent via overnight delivery. In practice, closings bring together a variety of parties who are part of the transaction. For example, while the history of property ownership has been checked, it’s possible that the records contain errors, unrecorded claims or flaws in the review itself, thus title insurance is necessary. At closing, transfer taxes must be paid and other claims must also be settled (including closing costs, legal fees and adjustments). In most transactions, the closing agent also completes the paperwork needed to record the loan. What to Expect Settlement is a brief process where all of the necessary paperwork needed to complete the transaction is signed. Closing is typically held in an office setting, sometimes with both buyer and seller at the same table, sometimes with each party completing their papers separately. Whatever the case, the result is that title to the property is transferred from seller to buyer. The buyer receives the keys and the seller receives payment for the home. From the amount credited to the seller, the closing agent subtracts money to pay off the existing mortgage and other transaction costs. Deeds, loan papers, and other documents are prepared, signed and filed with local property record offices. What You Need to Do One of the best parts of settlement is that buyers and sellers need to do very little. Before closing, buyers typically have a final opportunity to walk through the property to assure that its condition has not changed materially since the sale agreement was signed. At the closing itself, all papers have been prepared by closing agents, title companies, lenders and lawyers. This paperwork reflects the sale agreement and allows all parties to the transaction to verify their interests. For instance, buyers get the title to the property, lenders have their loans recorded in the public records, and state governments collect their transfer taxes.
10. What’s Next? You’ve done it. You’ve looked at properties, made an offer, obtained financing and gone to closing. The home is yours. Is there any more to the home buying process? Whether you’re a first-time buyer or a repeat buyer, you’ll want to take several more steps. Those papers you received at settlement are extremely valuable, so hold on to them! In the short-term they can help establish tax deductions for the year in which the property was purchased. In the future such papers will be important for tax purposes when the property is sold, and in some cases, for calculating estate taxes. Also at closing, determine the status of the utilities required by the home, items such as water, sewage, gas, electric and oil service. You want utility bills to be paid in full by owners as of closing, and you also want services transferred to your name for billing. Usually such transfers can be done without turning off utilities. REALTORS® can provide contact numbers and related information. About two weeks after closing, contact your local property records office and confirm that your deed has been officially recorded. Such records are public notices that show your interest in the property. Moving In It is generally understood that sellers will leave homes “broom clean” when moving out. This expression does not mean “vacuumed” or “spotless.” Broom clean makes sense because it means the house is ready to be painted and cleaned. Your Home, Your Money For most owners a home is the largest single asset they hold, so it makes sense to protect that asset. Many owners make a photo or video record of the home and their possessions for insurance purposes and then keep the records in a safety deposit box. Your insurance provider can recommend what to photograph and how to secure it. You want to maintain fire, theft and liability insurance. As the value of your property increases such coverage should also rise. Again, speak with your insurance professional for details. Lastly, enjoy your home. Owning real estate involves contracts, loans, and taxes, but ultimately what’s most important is that home ownership should be a wonderful experience. Enjoy! Source: Realtor.com