Buying a home starts with planning. Planning starts with a wish list. Wish lists are just that, wishes. With all wishes, we must have compromise. With compromise we all find that it may not be just what we wished for, but it’s just what we needed.
So start planning for that special home! Here are a few steps to help make it easy.
Step 1 – Make a wish list – not just in your head, on paper.
Step 2 – Talk with several lenders. Bank, mortgage brokers, credit unions, etc. to get pre-approved for a mortgage. This usually requires a little paperwork on your end of things including bank statements, W-2 forms, tax returns, employment verification, etc. Once this step is done, it will make obtaining the final mortgage go a bit quicker. The best reason for this step is to know what your “buying power” is. How much home can you afford.
Step 3 – Review that pre-approval against your real budget. Does it fit, or is it a bit higher than you want to have the lifestyle you also want. In other words, don’t overspend here. Just because the bank is willing to lend that much, does it make sense for you? This is the step that you will also want to put aside your “good faith deposit”. This is a CASH amount that you will need to have to write an offer. This means CASH, you cannot take it out of the money at closing. However, it does count toward your total purchase price so it does come off the statement at closing. Also, if a deal does not go through because of financing or inspections, your money is returned to you. Be sure you are aware of the process of deposit funds and how they can be held or returned.
Step 4 – You are ready to shop. Find a Realtor that you are comfortable with, you will be spending a lot of time together, trusting this person with your personal finance information, and wanting to form trust that they are going to listen to you, and work for you, to achieve your goal of finding the “wish list” home.
Step 5 – Once you are out shopping your wish list is probably going to need adjusting. You will soon see that not all you desire can be accomplished. This is where the compromise comes in. Especially for married couples – both of whom may have different wish lists. So get real here and adjust when necessary.
Step 6 – Write an offer. This is the painless part. Don’t be afraid to move into this step. If you have done Steps 1 – 5 you will be more than ready to go here. Make sure you think through the offer to take advantage of any concessions you may be able to ask for, etc. Your Realtor can help you here. Also make sure the offer is written in a way that satisfies the bank-end of things; your Realtor will help you here as well.
Step 7 – Accepted offer! You are getting there but don’t celebrate yet. A lot can happen before closing to nix a deal so let’s not move in yet – mentally. This is hard because you are so excited, but stay detached until you actually close so you do not fall in to that “disappointed” category. See my blog post on this subject: https://kadamscblakes.wordpress.com/2013/04/23/up-up-and-away/. Now you need to get into inspections. Your Realtor can give you a list of area home inspectors. You will need CASH for this step also. If you choose to have a home inspection done, you are bound by your contract to have it done in a certain time frame, usually 5 to 10 days. You will need to pay the inspector on the day of inspection. Your Realtor will be working with your Banker during this time to get the final work done for your mortgage.
Step 8 – Bank approval! Now it is beginning to be real. Once the bank has approved the mortgage we move into the closing phase. Closing date it set and everyone begins packing and preparing to move. Once in a blue moon something can happen here to end a deal. I just had one happen this week, two days before closing we had an enormous amount of rain hit our area and the basement got water in it. The buyers pulled out of the deal at the last-minute. It happens – but rarely. So stay focused here and don’t get too excited just yet. You will also be busy with moving preparations so your Realtor will be keeping things going with the Banker so that closing is organized.
Step 9 – Closing! Finally the day has arrived. A couple of days before closing, you should have a closing statement to review with your Realtor or Banker. This will spell out all your expenses on buying the home, and give you the “bottom line” price. On closing day, you will sign all the necessary documents for both your mortgage and the purchase of the home. Sometime the banks do the mortgage part separately, or the entire closing. If not, you will need to have a bank check with certified funds on closing day. Your Banker can help you arrange this. Also, for closing you need a photo I. D. That it!
Step 10 – Closed! Now you can celebrate! Once you return to earth – get moving! You have accomplished your goal – now isn’t that a great feeling. Happy Homeownership!