10 Steps to Buying a Home in 2014!
Buying a home is a very exciting time in one's life. We also understand that it can be stressful and time-consuming. Below are 10 steps that we feel can make the home buying process as stress-free, efficient, and enjoyable as possible.
1.) Know your Budget!
Mortgage lenders will let you know how much you can borrow, but we suggest creating a simple budget for yourself taking into consideration your current monthly income versus current monthly debt. Things to consider when creating a budget can include, but are not limited to; Rent, Utilities (gas, electric, water), Internet, Cell phone, Groceries, fuel, student loans, car insurance, car payment, gym memberships, etc...Only you can determine how much you are WILLING to spend on a mortgage payment. Even if you are qualified to borrow $100,000, you may not be comfortable with the monthly mortgage payment on a $100,000 home taking into consideration your current budget or current lifestyle (which may change once you are a homeowner).
2.) Find the Right Real Estate Agent!
As a prospective buyer you need to have a Realtor representing your interests during negotiations and someone who is competent enough to help you recognize the value in different homes and areas. Your Realtor should be knowledgeable, experienced, and familiar with the area in which your preferring to live in. In addition and possibly most important, your Realtor should ALWAYS be ethical and honest! Trusting your Realtor is extremely important when buying a home.
3.) Get Prequalified/Preapproved for your Mortgage!
Meeting with a lender and getting pre-qualified/pre-approved (there is a difference which is explained below) before you look at homes so you can avoid falling in love with a home that you cannot afford. We have some very good mortgage consultants that we work with consistently which benefits our clients due to our efficient working relationship with these consultants. We'd be happy to send a pre-qualification form along to you via e-mail or fax. It's also very important to get pre-qualifed/pre-approved prior to looking at homes because you will get an idea of how much cash you will need for down payment and closing costs.
Pre-Qualified vs. Pre-Approved:
Being pre-qualified is the initial step in the mortgage process. Generally, it should be fairly simple and quick for this to be done (The lenders we use can generally turn a pre-qualification application around in 24-48 hours). The lender takes a look at your overall financial picture based on what you tell them or provided them with (i.e., Income, Debts, Assets) and can determine which type of financing will suit you best and also how much they would be able to lend to you. They also will determine if you have enough of your own money or whether you may need seller assistance, sometimes referred to as "Seller Concessions." The lender will issue a "Pre-Qual" letter to you, subject to actual verification of information that you provided once you apply for your mortgage.
A pre-approval is typically a little more involved but is much more desirable when it comes time to negotiate on the home your going after. This could include paying a fee to the lender to pull a fact data (tri-merge) credit report, collecting pay stubs, bank statements, W-2's, etc. and actually confirming your employment status (referred to as a VOE or "Verification of Employment"). Most pre-approvals are as good as a mortgage commitment but are generally subject to a bank appraisal being done on the home you end up choosing. A true "pre-approval" saves weeks in time once you get an accepted offer on your property which means you can close that much sooner. Some lenders may use the terms interchangeably, so be careful, and make sure to clarify with your lender.
4.) Choose your Area(s) of choice!
Some areas/neighborhoods typically hold their value more than others. Working with a knowledgeable Realtor will help you find an area that meets your needs. We also suggest looking at information about specific neighborhoods that you may have interest in to see if they would be a fit for you or not.
5.) Establish the Needs VS. the Wants of your Home!
Buying a home can be time-consuming if not done correctly. Your Realtor should be able to help! Before spending your time looking at homes that may not work for your situation (Wrong school districts, too small, too large, wrong style of residence, lacking garage, etc.) we suggest communicating with your Realtor to discuss the needs vs. the wants of your home. If there are specific items that you NEED in your home (number of bedrooms, baths, garage or no garage, fenced yard, etc.) than your Realtor should only send you homes with those characteristics. If there are "wish list" or WANT items that you would like in your home (Granite counters, hardwoods, etc.) but you would be able to live without (and eventually upgrade/remodel while living there), you certainly shouldn't let this deter you from looking at a home because it doesn't have some of those wants.
Your Realtor should be able to set up a personal search tied into their respective MLS OR find a website with reliable and up-to-date free MLS property search.
6.) Shop for your Home!
Now that you know what budget your comfortable with, found the Realtor your comfortable with, know how much house you can afford, and have established the neighborhoods/areas and the criteria of your home, get out and start looking at homes utilizing your Realtors expertise! While visiting homes, we suggest taking notes to help remember specific details of each house since you'll likely be looking at several homes. Your Realtor should provide you with the property information and disclosures for each home and also will help point out things they may see (GOOD OR BAD) at each home you visit.
7.) Make an Offer!
Once you find the perfect home, it's time to work with your Realtor to make an offer. An experienced Realtor will provide you with the value of comparable homes in the same neighborhood. If you love a house and don't want to lose it, now is not the time to make a low-ball offer! There are several factors to consider when making an offering price (time on market, condition, comparable homes) and be sure to have dialogue with your Realtor about the different factors. Generally, most purchase offers are contingent upon both the buyers and sellers attorney approval. It's also important to select an attorney who is experienced in Real Estate Law as they are going to be representing you as well as your Realtor, in the transaction! We have several attorneys who are experienced and would be happy to provide their information to you.
8.) Have your Inspections!
In most cases, buying a home without having it inspected is not suggested. The inspector will be looking for serious flaws in the home and this is a great opportunity to learn a lot about the home and home maintenance in general.
We encourage you to attend the home inspection and we generally attend our buyers home inspections as well! We have several reputable home inspectors that we've worked with over the years but we also encourage you to "shop" inspectors if you choose to.
9.) Apply for Mortgage!
Once the home and/or other inspections are complete and the contingency(s) have been removed (if the offer was contingent on an inspection), you should now meet with the mortgage consultant to actually apply for your mortgage. The mortgage consultant should provide you with a list of documents that will be needed at application and also collect payment for the application and bank appraisal fees.
10.) Finalize the Details!
After you've completed all the above 1-9 steps, make sure to stay in constant contact with your Realtor, your lender, and your attorney to be sure everything is being taken care of in order to close on time! A great Realtor should continually be in contact with YOU and "keep you in the loop" as certain deadlines are approaching or a specific things are needed!
About the authors: The above information was provided by the Keith Hiscock Sold Team (Keith & Kyle Hiscock). With almost 30 years combined experience, if you’re thinking of selling or buying, we’d love to share our knowledge and expertise.
We service the following Greater Rochester NY areas: Irondequoit, Webster, Penfield, Pittsford, Fairport, Brighton, Greece, Gates, Hilton, Brockport, Mendon, Henrietta, Perinton, Churchville, Scottsville, East Rochester, Rush, Honeoye Falls, Chili, and Victor NY.