Buying a home - Step by step

The following outline has been prepared so you can become familiar with the basic steps involved in purchasing a home. Rest assured that your Realtor® will be with you every step of the way for effective service and knowledgeable direction. I am sure that this step-by-step guide will be helpful. If you have any questions, call me at your earliest convenience.  Best regards, Joseph Williams Professional Real Estate Consultant The format is set up in sections and sub-categories. Dollar signs ($$$) in the margins indicate when money is expected of you. Your total closing costs will be disclosed to you by the lending institution you choose prior to settlement.

Preparing To Buy Preparing the Offer To Purchase After Your Offer is Accepted Mortgage Approval The Closing

Part 1. PREPARING TO BUY Back to Top

Find a Professional Realtor®.

Interview your agent thoroughly. You are entering a big transaction so make sure you like and trust them. Being comfortable with your representative is very important.  Full-time agents are clearly your best bet. You want to have someone who is on the cutting edge of real estate trends and has the technology to stay on top of things for you.

Work with a licensed member of The National Association of Realtors®.   A true professional will have references. Ask for them.  Assess your situation.

• Are you ready to move?

• Do you need to sell a home before you can buy one?

• What is your available down payment?

• Is your job stable and your credit good?

• When would you like to be in your new home?

• Do you have any special needs?

Speak with your Realtor®; she/he has been through this many times with previous clients, and they are trained to help you through this critical stage.  Determine a target area that you would like to live in.  Consider things like price range, rate of appreciation, location.  Research schools, if necessary.  Consider what style of home you would like. Sometimes this will dictate the areas you can search.  Consider locations of activities you engage in (e.g. clubs, churches, and other organizations.)

Get Pre-approved!

Complete a financial statement with your Realtor®. This is a great place to get started. A real professional will take it from here by referring reputable mortgage sources and helping you through the mortgage process. You will then receive a pre-approval certificate.

When you are pre-approved you are much more appealing in the eyes of a seller. Having greater purchasing power can be the difference between shopping for and owning you dream home.

$$$ Once the pre-approval process is complete the mortgage company you choose will require an application fee and a small fee for pulling up your credit report. These items are considered part of your closing costs and you will receive a credit at closing for these items paid outside of closing (P.O.C.)

View properties

Your Realtor® has access to all of the finest properties available. A skilled professional will save you hours of aggravation by showing you homes that you want to see.

If you feel right about a house, pursue it! There is no exact science to this. Therefore it’s best to follow your instincts when it comes to choosing a home. You’ll know the right house for you when you see it.

Start with price and terms.  Based on the activity of the neighborhood and the amenities of the home you choose, your Realtor can suggest the best place to start with your price and teams by completing a Market Analysis on the property.

Each property has a different set of circumstances involved. Therefore, it is a common misconception that there is a standard format for negotiating. Listen very carefully to your Realtor regarding the details of the home you choose, then make an educated decision as a team. If you are confident that your offer is fair, the chance of it being accepted is very good.

Your offer should inherently contain a clause regarding the following items: an inspection clause (to have a professional inspect the fitness of the home for you), a mortgage clause (allowing a reasonable time to obtain an unconditional mortgage approval), a title policy clause (to guarantee a clear marketable title), and the rest of the contents can vary depending on the circumstances of the sale.

$$$  With your offer, you are expected to leave a deposit. This is called the Earnest Money Deposit. This shows the seller that your intentions are genuine. Earnest Money Deposits are typically 3% of the price you offer. A personal check is acceptable. If your offer is accepted, your deposit will then be placed in a non-interest bearing escrow account for you until it is credited toward your down payment at settlement (closing). 

Your Realtor is critical here. The negotiating may become hectic once the offer is in front of the seller(s). Remember: Your Realtor is on your side, and do not allow your emotions to dictate this business transaction. Predicate all of your choices on the facts and make educated decisions. Have faith in your Realtor’s ability to negotiate a good solid deal, and always work together.

Feel Great!  It’s a wonderful feeling to know that soon you will be enjoying the surroundings of your new home.  Confide in your Realtor®. They have been through this and are very familiar with the process.

$$$   Have the house inspected.  You typically have one week to have the home inspected by a professional. This is money well spent. Cutting corners in this area has proven to be a big mistake for people in the past. Get a pro!

The cost for this inspection may fluctuate. Your Realtor® can recommend some reputable companies if you do not already have one selected. Be sure your inspector is licensed and insured.

Contact your mortgage company to assure that they have all of your necessary documents to complete your file.

• Your Original Purchase Agreement (provided by Realtor®.)

• Copy of listing ticket (provided by Realtor®).

• Your past two years of W-2 forms.

• Your most recent pay stub.

• Financial statement, if necessary.

• Bank statements for all accounts for the past 3 months.

• Cancelled checks for last 12 months rent (if necessary).

• All account numbers (i.e. auto loans, credit cards, any other installment loans, or revolving charge accounts.)

Find out what your closing costs are.  Your lending institution must give you a copy of a Good-Faith-Estimate. This is a breakdown and description of your closing costs.  Now is the time to lock-in your interest rate if you have not already done so. Interest rates can change a little bit, several times in one day. So keep an eye on this until it is locked.  

Stay in touch with your lender.  A title search must be completed to assure and unencumbered title to the property.  A survey is done to assure that there are not any encroachments or other concerns regarding the property lines.  An appraiser needs to conduct a full appraisal of the property to verify the value.  The lender will verify all of your current accounts and your employment along with many other smaller details.

$$$ Get your homeowner’s policy.  This is also referred to as hazard insurance. You will need to bring a receipt for one year’s paid policy to the closing.  If you do not already have a good company to provide this type of policy, as your Realtor for some insight.

Get a closing date.  Your Realtor® should be following up on all of these items. When you get to this point, everybody should be ready to close.  The actual date of closing will be set by the listing agent (within reason) if the exact closing date is not specified on the Purchase Agreement.

Double check.  Now is the time to verify all of the items everyone has been working on. There are several people involved in the transaction by this time – DOUBLE CHECK!  If you spend the time to see everything through completely, you will be much more comfortable at the closing.

Review your closing package.  The Title Company handling the closing will provide a closing package. Your Realtor will go over all of these facts and figures with you prior to closing.

You will also need to contact your lending institution for the balance of your closing costs. The final check you need should be a bank or certified check made payable to yourself – this way you can endorse the check when all of your requests have been fulfilled.

$$$ Get there early.  Now is the time for any final questions.  You will have an opportunity to meet the sellers, the other Realtor, the closing officer and occasionally, an attorney.  The closing officer will begin by collecting a copy of everyone’s photo identification.

Signatures on all of the required documents will then be collected (i.e. the deed, the mortgage, the note, the necessary affidavits, and other binding documents.) There should not be any surprises here. If you are uncomfortable, stop and ask for a full explanation.

When all of the paperwork is completed, you give your check and proof of homeowners insurance to the closing officer and your closing is complete.