Looking to buy a home this year? One of the most important things you can do to prepare for your purchase is to understand the home buying process BEFORE you buy!
So what are the steps in the home buying process?
I’m sure it won’t surprise you to hear that the first step is hiring a realtor! A realtor is your trusted guide and your best resource for helping you get some new keys!
After you’ve hired your realtor, the process will (usually…) go like this:
1: Get pre-approved for a mortgage.
A preapproval letter is actually a document you receive from the lender. This document will give you an idea of how much you can afford, and it will show sellers that you are a serious buyer. If you don’t qualify for a loan, the lender should be able to give you steps to take to qualify in the future.
2: Once you’re pre-approved, do your research!
· Make a list of what you must have in your new home. Some sample MUST HAVE’S could be proximity to work or needing 3 bedrooms.
· Make a list of what you’d LIKE TO HAVE. These are features that would be nice to have but won’t prevent you from purchasing a home.
· Drive through potential neighborhoods you are interested in at different times of the day. Drive to (or from) work from each neighborhood in the morning/evening to see if the commute is manageable for you.
· Attend open houses to see if you need to adjust your MUST HAVE and LIKE TO HAVE list. Mention to the agent on duty that you have agent representation but don’t disclose any of your personal information.
Keep your agent updated on your progress as they will be setting up auto searches from the MLS for your next home. The more information you can provide them, the better!
3. Have your finances in order.
Once you and your agent find your Dream Home, things will move quickly. You’ll need to have funds available for your earnest money deposit which, in Maryland, is typically 1% of the purchase price.
4. Depending on your contract, the next steps will vary.
Some contingencies your realtor may have incorporated into your contract include:
· Inspections: (general home inspection, radon inspection, pest inspection, well/septic inspections, etc.) You’ll have a certain number of days to complete inspections. Depending on results, you might decide to request that the seller complete repairs prior to settlement.
· Appraisal: An appraiser will determine if the sales price is fair market value for the home.
· Review of homeowner’s association documents or condominium association documents if this applies for the home. You’ll want to review these carefully so you are aware of any limitations or restrictions that could impact your life in your new home. Many of these associations have bylaws and architectural restrictions.
These are just a few examples. Each home and transaction is unique and could have additional terms that must be addressed before proceeding to settlement.
6. Get a financial commitment letter from your lender.
This is one of the last steps before heading to settlement and is typically one of the last contingencies to be addressed.
At least three days prior to settlement, your lender should let you know the final amount of funds you will need to pay at closing. You’ll typically wire the funds to the title company several days prior to settlement.
7. Settlement Day!
You and your realtor will most likely do a final walk through of the home just prior to settlement to ensure that everything is in working order. You’ll sign paperwork with the title company and the agent will hand you the keys to your new home!
So, just 7 steps, right? Maybe! You never know when an extra step may be added to the process or when something comes up that alters this process.
What if the property has ground rent and the lender won’t provide commitment unless it’s redeemed? What if something happens to the property while it’s under contract? What if the seller isn’t able to complete the agreed upon repairs from the home inspection?
Our Team has experienced all of these issues…and more…and we’ve solved them so that our clients get to the settlement table. That’s why it’s so important to have a realtor on your side to help you every step of the way!
Looking to make a move this year? Reach out to us!
