Buying a home is one of the biggest investments and financial decisions you can make. While it is a major commitment and responsibility, it is also a very exciting time in your life. I’m proud that I will get to play a part in it and am excited about soon having he privilege of handing you the keys to your new home!
With that said, it’s important to keep in mind that home buying is a complicated process. I will be working hard to make sure that everything is as rewarding as possible, guiding you at every step and making sure that your needs and desires are met. This list will inform you of all the steps of the home buying process so that you can feel confident, make informed decisions and act as an educated buyer. For more detailed information on all of these steps, please search my blog and request a copy of my Home Buying Guide.
Most home buyers find that they need to finance at least part of their home purchase. Therefore, the first state in finding the right home is to review your personal financial situation and make an informed estimate of your true purchasing power. Your purchasing power will depend on:
- Your Income
- Your Credit Rating
- Other Monthly Expenses
- Your Down Payment
- Available Interest Rates
You should have a rough idea of what kind of monthly payment you would feel comfortable paying based on your current monthly budget. If you haven’t been paying attention to your credit score, now would be the time to look and see where your score falls (most lenders will look for at least a 620 score). After reviewing this information for yourself, it’s time to speak to a qualified lender. A professional adviser will not only be able to give you information on the best rates and terms available in the current market, but he or she can also explain to you what options you have, given your unique financial situation. If you need the names of some reputable lenders, please let me know.
I’ve made a commitment to help you find a home that suits your wants and needs, so now it’s time for you to articulate exactly what those wants and needs are. By sitting down and considering the kinds of things you’re really looking for, we can save a lot of time and frustration by avoiding houses that aren’t for you. We will meet and discuss your ideal home and put all your priorites in order. This will give me a starting point to begin looking for homes that may be a good fit for you.
Pre-Qualification vs. Pre-Approval. Pre-qualification is only a lender’s opinion that you’ll be able to obtain financing. No verifications are made, so formal approval is not issued. Pre-approval means your loan application has been taken through a rigorous procedure. Here, the lender will run a credit check, verify monthly income, assets, deb-to-income ratio, and determine how much you can borrow. The result of this will be a “Pre-Approval” letter. Pre-approval saves you the time of looking at houses you can’t afford. Pre-approved buyers are ahead in the home buying game. If you make an offer on a home and then apply for a loan, instead of the other way around, you are at the mercy of the lender, who now knows that you don’t have time to shop around for the best rates and terms. Plus, most sellers will not consider an offer without proof of pre-approval attached.
Let The Search Begin!
Home shopping can be both exciting and exhausting, but doing some preparation before you hit the street to look at homes will help out tremendously. Chances are you’ve already started your search onlince. When you find a listing online that you’re interested in, please let me know. Not only will I arrange a showing time for us to view the property, I will also search the MLS for similar properties so you can look at other homes like the ones you’ve found. I will also set up a search based on the information you provided at our meeting, and will send lists of homes that meet your criteria on a regular basis. After we begin looking at homes together, I will get a better feel for what will and will not work for you. This will allow me to preview properties, when possible, in order to rule out those that won’t work and save you valuable time.
Making An Offer
You’ve found your dream home! Time to make an offer. After researching current market conditions, I will help identify the right offerering price and necessary contingencies and draw up a formal contract. We will carefully review the document and make sure it states your terms exactly. If the offer is accepted by the seller, this contract will become a legally binding agreement. In addition to an offer contract, you will need to provide earnest money as well as a letter from your lender indicating your qualification to purchase.
Your offer’s been accepted! Now it’s time to get to work. Before we can close on the purchase of your new home, we need to take a few more steps to make sure the purchase is a sound decision. As the buyer, you have the opportunity to hire a professional inspector to evaluate the condition of the home. An inspection clause is included in the written contract given to the seller. The goal of a home inspection is to give you an objective, independent and comprehensive analysis of the physical condition of your potential new home and check for any safety issues that might otherwise be unknowable.
Checking Title To The Property
Simply explained, “title” is the right to own, possess, use, control and dispose of property. When you buy a home, you are actually buying the seller’s title to the home. A deed is the written legal evidence that the seller has conveyed his or her ownership rights to you. Our chosen title specialist will conduct a title examination. The purpose of the title examination is to discover any problems that might prevent you from getting clear title to the home. We will receive a written report from the title agency which we will review for any title problems.
Once all inspection concerns have been resolved and you have determined that there are no defects on title, it is time to order an appraisal. An appraisal is an estimate of the value of a property made by a qualified professional. The appraisal of your prospective home is as important as your credit history in obtaining a mortgage. After all, the property you are purchasing serves as the collateral for the loan. Although the primary goal of the appraisal is to justify the lender’s investment, it also protects you from overpaying. If the appraisal falls short of the amount you want to borrow you may be refused a mortgage or offered a smaller amount on the mortgage. Your offer will be contingent on whether the appraisal comes in at or above the purchase price you and the seller have agreed upon.
Prior to closing, we will want to take a few final steps. Your lender may require a few additional items during this time, but all of it is meant to ensure a clean and efficient closing. Often, a lender will require notification of any major purchases, new debt, or lowering of cash reserves as these issues may impact a final approval. You will also need to obtain a homeowner’s insurance policy and provide this information to your lender. We will also conduct a final walk-through of the property. This will give you the opportunity to see that the condition of the house is the same as it was at the time the contract was written. Additionally, you will be able to ensure that any repairs which had been agreed to by the seller, based on the inspection, have been completed.
All the preparation is complete. Now, it’s time for closing. Closing is the legal transfer of ownership of the home from seller to buyer. It is a formal meeting that most parties involved in the transaction will attend. Closing procedures will be held at the title company where the closing officer will coordinate the signing of the documents and the collection and disbursement of funds. Once all parties have signed and the banks have been funded, the deed will be recorded. Recording in the State of Alaska happens the day after signing. The home is now yours!!