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Buying a home, whether for the 1st time or the tenth time can be an exciting yet sometimes overwhelming adventure. Here is a general summary of the 9 Steps to Home Ownership. As your agent, I will work together with you, your attorney and loan officer through the entire process.
1) PRE-APPROVAL – This is the first, yet very important, step in your home buying process. It is necessary in today’s market to have a pre-approval letter so it can be turned in with any offers you might decide to make on a home. By going to the bank or mortgage company they will let you know exactly what you can afford and the maximum they will loan you. There is no charge to obtain a pre-approval letter.
2) SEARCHING FOR A HOME – I will begin to show you houses in your price range in communities you would like to live. Most people look at 5 to 7 homes before they find the one they would like to make an offer on. I encourage you to look at a variety of homes so you can be sure your getting exactly the home you want.
3) OFFER TO PURCHASE – Once you find a home that you like the next step is to make an offer on the home. I will provide you with a standard “Offer to Purchase” form and complete it for you. It is important to keep in mind that there may several offers on the table that a Seller can choose from, so it is wise to make your first offer your best offer. Also, the Seller may counter your offer if they don’t like your original offer. A $100.00 deposit of either cash or a personal check is required. If your offer is not accepted this money is returned back to you.
4) PURCHASE & SALES AGREEMENT – Most P & S are standard contracts used in the industry. However, you may decide to have your real estate attorney look over the contract, as this is a legally binding contract. At the time you sign the P & S there is an additional deposit required depending on the price of the home. This deposit must be a bank check or money order in the required amount made out to the real estate company listing the home. This deposit then becomes part of your down payment. If the sale is not finalized for a reason beyond your control or due to one of the contingencies, the earnest money will be returned to you.
5) HOME INSPECTION – You are given 10 days from the date on the contract to have a home inspection by a licensed inspector. I strongly recommend you do so. The Buyer pays for the home inspection (usually ranging from $250 to $400) depending on the number of units. You may also want to consider doing the following tests at the same time: pest (termite), radon, water quality, lead paint, septic/sewer, drainage, 21E, etc. The home inspection will give you peace of mind. If there are any major flaws with the home that make you decide not to go forward with the purchase, you will need to notify the Seller (through me) in writing and request the return of your deposit.
6) LENDERS -I can recommend a number of banks and mortgage officers who will complete the mortgage application for you or you may decide to go the bank that gave you your pre-approval letter. You may decide to lock in the rate the bank gives you. The rates can rise by the time you actually close (usually anywhere from 30 – 60 days), thus if you do not lock in the rate you will actually pay the higher rate. Some of the items you will need for this step are the following:
· Driver’s license and social security cards · Residence addresses for the past 2-5 years · Your landlord’s name and address · Names and addresses of your employer for the past 2-5 years · Pay stubs for the past 4 weeks · Two years signed tax returns and W2s · Account numbers for all bank accounts you have · Information on any stocks or bonds you own · Details of any real estate you currently own · Copy of fully executed Purchase & Sales contract and a copy of the listing sheet · Divorce decree and child support agreements · Previous bankruptcy discharge if applicable
A “Good Faith” estimate of the closing costs will be provided to you from the lender. It includes the costs for points, appraisal, title search, title insurance, survey, recording of deeds and the bank’s attorney fees. Closing costs can run anywhere from $2,000 to $5,000 depending on the points.
Say you are buying a home for $250,000 and the points are 1% of the loan, that would be $2,500 AND 2% of the loan would be $5,000.
Private Mortgage Insurance – Most lenders require PMI if your down payment is less than 20% of the purchase price. It protects the lender in case you default on the loan. After a year or so you can request in writing to the bank that they remove the PMI of your home now has increased in value over the 20% requirement.
7) HOMEOWNER’S INSURANCE – This can be obtained through any insurance agency. It’s not a bad idea to shop around as prices vary. A homeowner’s insurance binder (paid in full for the year) is required by the bank before you can close on your home.
8) FINAL WALKTHROUGH – This gives you an opportunity to inspect the home one last time before closing. It gives you peace of mind that all requests on the purchase and sales agreement have been fulfilled. Such as checking fixtures are still in place and items that you requested as part of the agreement have been left there as well as making sure Sellers are out as well as any tenants before you close.
9) CLOSING DAY – You should have your lawyer present if you have decided to hire one. You should also bring your checkbook in case there are any additional dollar amounts needed. You also must bring your driver’s license(s) with you. The whole closing process takes about an hour. After signing the numerous documents you will then become the proud owners of your new home.
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Patricia Carneiro
Real Estate Broker/ (954) 658-5136
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