Could you give me a rundown
of the entire buying process?
This is a basic overview of what happens when you buy a house. The whole
process really isn't so intimidating if you know what's going on.
first thing you should do when thinking of buying a home is get
pre-approved with a lender. This way you'll know exactly how much house
you can afford.
Next, you should sit down and determine exactly what you are looking for
in a home. Write down the number of bedrooms and baths you need, and any
other details you can think of (garage, yard size, proximity to schools,
public transportation, etc.)
you know what you want in a home, I can help you find all the homes on the
market that fit your needs. We'll set up appointments and view the homes.
You may want to take notes on each property to compare them after seeing
soon as we find the right house for you, I can help you write up an offer
and I'll present it to the seller. Hopefully, your offer will be accepted
right away. If not, you can negotiate with the seller until you reach an
agreement that suits everyone's needs.
After the offer is accepted, you will probably want to have a home
inspection, to make sure there aren't any problems with the property.
next step in the process is the Purchase and Sale Agreement. This is a
document very similar to the original Offer to Purchase, but much more
detailed. You'll want to give your lender a copy of this document as
quickly as possible so they can have an appraisal done and verify the rest
of the paperwork for your mortgage.
your lender has all the information and documentation they need to close
the loan, they will give you a commitment on your mortgage. As soon as
this is done, the closing attorney will schedule a closing.
the closing, you and the seller will sign some documents and you will then
be given the keys to your new home.
How should I prepare for
buying a home?
Make sure you know where your down payment funds will come from. If you
need to sell stocks, or get the money from a relative, do it now. You'll
be relieved not to have to worry about it when you need it.
Write down a list of everything you could possibly want in your dream
home. Then go back through your list and circle the things that you
absolutely MUST have. These are the items that are most important to you.
Keep this list with you when you are looking at homes, and use it as a
guide to narrow down your search.
Gather the documents you'll need to apply for your mortgage. Most lenders
will ask for the following:
W-2's for the last two years: If you are self employed, commissioned or
own other real estate you should have 2 years 1040's with all schedules.
recent paystub for all jobs.
Bank statements for the past 3 months for all accounts and any
retirement or investment accounts.
Statements or payment books for any installment loans including
The name and address of your landlord for the past 2 years (to verify
timely rent payments) or 12 months canceled rent checks.
Proof of funds for your earnest money deposit.
Self employed borrowers may need to prepare a year to date profit and
Addresses, Loan, tax, insurance info and leases for any other real
What is the first step in
the home-buying process?
Get pre-approved with a lender. This means you will submit a loan
application and most of the necessary paperwork to obtain a mortgage. Your
credit will be checked, and your mortgage will be approved. All you'll
need to do then is find your new home.
How do I find out how much
house I can afford?
There are a number of formulas you could use to determine how much house
you can afford. You would do best, however, to speak to a mortgage lender.
They could give you a much more accurate idea of what price range to look
in based upon your income, debts, current interest rates, and the loan
programs that are available. A lender will be able to make suggestions for
the loan program that will meet your needs best.
What is the difference
between a pre-qualification and a pre-approval?
A pre-qualification is a letter from a lender stating that, based on your
income and a rough idea of your expenses, you may qualify for a certain
loan amount. This is subject to a full credit check and supplying the
necessary paperwork. A pre-qualification is not a guarantee that you will
be able to obtain financing, it is solely an estimation of what you could
A pre-approval means you have already submitted a loan application and
most of the necessary paperwork to obtain a mortgage. Your credit has been
checked, and your mortgage is already approved. All you'll need to do then
is find your new home.
Being pre-approved gives you a distinct advantage when making an offer on
a property. A seller is more likely to accept an offer when they know you
will not have a problem getting a loan. It also makes the process much
easier on you. Once you find a home, you'll want to concentrate on
planning your move, not worrying about whether your loan will be approved.
Can I buy a home below
It depends on the market. In some cases you can find a "bargain" and pay
less than market value for a property. The most common examples of these
are homes that need rehab work and foreclosures or government-owned
property. If you have the time and money to put into a rehab, and are wise
about how you go about the project, they can be a wonderful investment,
sometimes giving an excellent return. If you are considering a bank or
government-owned foreclosure, make sure you do your homework first, as
most of these properties are sold "as-is".
How is an asking price
Asking price is usually set using a CMA or Comparable Market Analysis.
This method uses other properties that are similar in size, style, and
condition, that are currently on the market or have recently sold, to
determine a reasonable price.
What contingencies are
usually put in an offer?
Most offers include two standard contingencies: an inspection contingency,
which allows buyers to have professionals inspect the property to their
satisfaction and a financing contingency, which makes the sale dependent
on the buyers' ability to obtain a loan commitment from a lender. If the
seller is to make any repairs to the property, they should also be written
into the offer, along with any other specific arrangements made between
Do I have to put down a
deposit with my offer?
In order to show good faith to the Seller, a deposit, usually, a personal
check or money order, accompanies the written Offer to purchase. Many
times the amount of this initial deposit is between $500. and $1,000.
How can I make my offer
stand out against competing buyers?
Being pre-approved for a mortgage gives you a distinct advantage when
making an offer on a property. A seller is more likely to accept an offer
when they know you will not have a problem getting a loan.
What happens to my deposit
if my offer is accepted?
Once all parties have agreed to a price and terms and have signed the
Offer to Purchase agreement, the deposit is placed in an escrow account,
where is stays until the closing. The deposit is usually counted as part
of your total down-payment.
What happens to my deposit
if my offer is rejected?
If the Seller rejects your offer outright or if all parties cannot agree
on price and terms, the deposit is returned to you.
What is a final
A final walk-though is an opportunity to for the buyer to walk through the
property and make sure everything is the way you agreed in the Purchase
and Sale Agreement. Any work that was to be done before the closing should
be completed at this point, and if the property is to be delivered vacant,
any tenants should have moved out. If there is a problem and things are
not as you'd agreed, then arrangements can usually be made at the closing
to remedy the situation. The final walk through is usually done right
before the closing.