Eight steps to buying your home
1. Decide to buy.
Although there are many good reasons for you to buy
a home, wealth building ranks among the top of the
list. We call home ownership the best “accidental
investment” most people ever make. But, we believe
when it is done right, home ownership becomes an
“intentional investment” that lays the foundation
for a life of financial security and personal
choice. There are solid financial reasons to support
your decision to buy a home, and, among these,
equity buildup, value appreciation, and tax benefits
stand out.
Base your decision to buy on facts, not fears.
If you are paying rent, you very likely can afford
to buy
There is never a wrong time to buy the right home.
All you need to do in the short run is find a good
buy and make sure you have the financial ability to
hold it for the long run
The lack of a substantial down payment doesn’t
prevent you from making your first home purchase
A less-than-perfect credit score won’t necessarily
stop you from buying a home
The best way to get closer to buying your ultimate
dream home is to buy your first home now
Buying a home doesn’t have to be complicated – there
are many professionals who will help you along the
way
2. Hire your agent.
The typical real estate transaction involves at
least two dozen separate individuals – insurance
assessors, mortgage brokers and underwriters,
inspectors, appraisers, escrow officers, buyer’s
agents, seller’s agents, bankers, title researchers,
and a number of other individuals whose actions and
decisions have to be orchestrated in order to
perform in harmony and get a home sale closed. It is
the responsibility of your real estate agent to
expertly coordinate all the professionals involved
in your home purchase and to act as the advocate for
you and your interests throughout.
Seven main roles of your real estate agent
A Buyer’s Real Estate Agent:
Educates you about your market.
Analyzes your wants and needs.
Guides you to homes that fit your criteria.
Coordinates the work of other needed professionals.
Negotiates on your behalf.
Checks and double-checks paperwork and deadlines.
Solves any problems that may arise.
Eight important questions to ask your agent
Qualifications are important. However, finding a
solid, professional agent means getting beyond the
resume, and into what makes an agent effective. Use
the following questions as your starting point in
hiring your licensed, professional real estate
agent:
Why did you become a real estate agent?
Why should I work with you?
What do you do better than other real estate agents?
What process will you use to help me find the right
home for my particular wants and needs?
What are the most common things that go wrong in a
transaction and how would you handle them?
What are some mistakes that you think people make
when buying their first home?
What other professionals do you suggest we work with
and what are their credentials?
Can you provide me with references or testimonials
from past clients?
3. Secure financing.
While you may find the thought of home ownership
thrilling, the thought of taking on a mortgage may
be downright chilling. Many first-time buyers start
out confused about the process or nervous about
making such a large financial commitment.
From start to finish, you will follow a six-step,
easy-to-understand process to securing the financing
for your first home.
Six steps to Financing a Home
Choose a loan officer (or mortgage specialist).
Make a loan application and get preapproved.
Determine what you want to pay and select a loan
option.
Submit to the lender an accepted purchase offer
contract.
Get an appraisal and title commitment.
Obtain funding at closing.
Loan Estimator
4. Find your home.
You may think that shopping for homes starts with
jumping in the car and driving all over town. And
it’s true that hopping in the car to go look is
probably the most exciting part of the home-buying
process. However, driving around is fun for only so
long – if weeks go by without finding what you’re
looking for, the fun can fade pretty fast. That’s
why we say that looking for your home begins with
carefully assessing your values, wants, and needs,
both for the short and long terms.
Questions to ask yourself
What do I want my home to be close to?
How much space do I need and why?
Which is more critical: location or size?
Would I be interested in a fixer-upper?
How important is home value appreciation?
Is neighborhood stability and priority?
Would I be interested in a condo?
Would I be interested in new home construction?
What features and amenities do I want? Which do I
really need?
5. Make an offer.
When searching for your dream home, you were just
that – a dreamer. Now that you’re writing an offer,
you need to be a businessperson. You need to
approach this process with a cool head and a
realistic perspective o your market. The three basic
components of an offer are price, terms, and
contingencies (or “conditions” in Canada).
Price – the right price to offer must fairly reflect
the true market value o fthe home you want to buy.
Your agent’s market research will guide this
decision.
Terms – the other financial and timing factors that
will be included in the offer.
Terms fall under six basic categories in a real
estate offer:
Schedule – a schedule of events that has to happen
before closing.
Conveyances – the items that stay with the house
when the sellers leave.
Commission – the real estate commission or fee, for
both the agent who works with the seller and the
agents who works with the buyer.
Closing costs – it’s standard for buyers to pay
their closing costs, but if you want to roll the
costs into the loan, you need to write that into the
contract.
Home warranty – this covers repairs or replacement
of appliances and major systems. You may ask the
seller to pay for this.
Earnest money – this protects the sellers from the
possibility of your unexpectedly pulling of the deal
and makes a statement about the seriousness of your
offer.
6. Perform due diligence.
Unlike most major purchases, once you buy a home,
you can’t return it if something breaks or doesn’t
quite work like it’s supposed to. That’s why home
owner’s insurance and property inspections are so
important.
A home owner’s insurance policy protects you in two
ways:
Against loss or damage to the property itself
liability in case someone sustains an injury while
on your property
The property inspection show expose the secret
issues a home might hide so you know exactly what
you’re getting into before you sign your closing
papers.
Your major concern is structural damage.
Don’t sweat the small stuff. Things that are easily
fixed can be overlooked.
If you have a big problem show up in your inspection
report, you should bring in a specialist. If the
worst-case scenario turns out to be true, you might
want to walk away from the purchase.
7. Close.
The final stage of the home buying process is the
lender’s confirmation of the home’s value and legal
statue, and your continued credit-worthiness. This
entails a survey, appraisal, title search, and a
final check of your credit and finance. Your agent
will keep you posted on how each if progressing, but
your work is pretty much done.
You just have a few preclosing responsibilities:
Stay in control of your finances.
Return all phone calls and paperwork promptly.
Communicate with your agent at least once a week.
Several days before closing, confirm with your agent
that all your documentation is in place and in
order.
Obtain certified funds for closing.
Conduct a final walk-through.
On closing day, with the guidance of a settlement
agent and your agent, you’ll sign documents that do
the following:
Finalize your mortgage.
Pay the seller.
Pay your closing costs.
Transfer the title from the seller to you.
Make arrangements to legally record the transaction
as a public record.
As long as you have clear expectations and follow
directions, closing should be a momentous conclusion
to your home-searching process and commencement of
your home-owning experience.
8. Protect your investment.
Throughout the course of your home-buying
experience, you’ve probably spent a lot of time with
your real estate agent and you’ve gotten to know
each other fairly well. There’s no reason to throw
all that trust and rapport out the window just
because the deal has closed. In fact, your agent
wants you to keep in touch.
Even after you close on your house, you agent can
still help you:
Handle your first tax return as a home owner.
Find contractors to help with home maintenance or
remodeling.
Help your friends find homes.
Keep track of your home’s current market value.
Attention to you home’s maintenance needs is
essential to protecting the long-term value of your
investment.
Home maintenance falls into two categories:
Keeping it clean: Perform routine maintenance on
your home’s systems, depending on their age and
style.
Keeping an eye on it: Watch for signs of leaks,
damage, and wear. Fixing small problems early can
save you big money later. |
