The decision to buy a home is a smart one. Real estate prices have never been more affordable and interest rates have never been lower creating a win-win scenario for people entering the market.
Many people ask the question “how do I purchase a home?
If you’re thinking about buying a home here the eight steps from beginning to end.
Step one- Make decision to purchase a home.
The benefits of homeownership over time far outweigh the option of renting. If you are paying comparable market rents, you’ve more than likely can afford a mortgage payment. This new monthly mortgage payment can even be set up to include your principal and interest, property taxes, fire insurance and in some cases monthly mortgage insurance. Besides tremendous affordability, homeownership provides many tax benefits.
Step two-Find mortgage loan financing.
Buying a home especially in the beginning, can seem overwhelming at times stressful because it is such a big investment, that’s why it’s important to work with a mortgage professional who understands your complete situation. First time home buyers sometimes begin the process nervous with many questions, the key is to make sure you have somebody who’s willing to listen. You can find a Santa Rosa mortgage lender through Google, a real estate agent, a friend or even a family member.
This mortgage professional will help you do the following steps throughout the process.
- Making a loan application and getting preapproved
- Determining your house payment and the right mortgage loan program
- Submitting to the underwriter an accepted purchase offer contract
- Securing an appraisal and title insurance commitment
- Obtaining funding at the close of escrow
Step 3-Hire A Qualified Real Estate Agent
A typical real estate transaction involves an insurance agent, mortgage lender, underwriter, processor, appraiser, escrow officer, listing agent, seller, and title insurance professionals. Your real estate agent’s role is to help coordinate the transaction with you and your mortgage lender to a successful close of escrow. Not all real estate agents are the same. It’s best to work with a professional who has experience and will only work with you if you have a pre-approval in hand.
Your real estate agent is responsible for these items:
- Educates you about the local market
- Analyzes the market for affordability and opportunities
- Make sure the homes you are looking at fit your criteria
- Coordinates the work of other media professionals during the escrow process
- Negotiates on your behalf.
- Double checks all paperwork and essential contractual deadlines
- Solves any challenges that might arise along the way
You can always check with your mortgage lender for an introduction to a fantastic real estate agent.
So now you are on your way to buying a home, now we just have a few more steps.
Step Four- find your home
Searching for homes it is a lot easier said than done. Make sure your real estate agent sets you up with an active MLS listing feed to give you real-time data. You can also look on the Internet and it’s encouraged to drive around in the neighborhoods you are thinking about purchasing. Real estate is about location and you want to make sure that your purchasing a desirable area for your family.
Questions to ask yourself during the shopping phase.
- What do I need my home to be close to? family, schools, downtown
- How much space do I need and why? Kids down the road etc.
- Which is more important to me size or location?
- Would I be interested in new home construction?
- Would I be interested in a condo or a planned unit development?
- What I’d interested in a fixer?
- What features and amenities do I need to have in in my property?
Step Five- Make an offer
This is a very competitive marketplace. First-time homebuyers are going up against other first-time buyers, as well as all-cash buyers and real estate investors. This is why it’s critical to make sure if a property comes up on the market and it is a hot property, make yourself available to make an offer on it immediately. You have to be ready to act quickly in order to take advantage of prime opportunities. Do not get attached to the property. Remember that if this property does not work, another one will come up. The bigger picture here is to be able to get into the market.
Here are the components that make up a real estate purchase contract offer:
- Price- something you in your real estate agent need to discuss thoroughly.
- Escrow time frame- is it a 30 day close of escrow or 45 day close of escrow?
- Conveyances-what items are going to be staying with the house?
- Closing costs- the general rule is 3% for closing costs-oftentimes sellers are paying closing costs for first-time home buyers.
- Home warranty -this covers replacement of appliances and seller usually pays for this.
- Earnest money-this is usually upwards of 3% of the purchase price with an increased deposit after the loan contingency removal which is typically about 17 days into the contract time frame, again this is something you want to make sure to discuss with your real estate agent
You are almost there into buying a home, now we are nearing the finish line to you getting your keys!
Step Six- perform all inspections on the property
You’ll be required to purchase to have title insurance to make sure that the property you are buying is free from any liens on encumbrances by any other individuals. This gives you a clear chain of title, other words, you’re buying a property with a clean slate.
Make sure to perform all final inspections and sign off on mortgage loan contingency removals as well as the appraisal contingency removals.
Step Seven- Fund & Close Escrow
After you sign the final loan documents which can either be done at the convenience of your home or even at the local title company you’ve hired to get title insurance for you, the loan will fund and subsequently close escrow. It is when you’re transaction closes escrow and records that you will able to get your keys.
If you felt you had a positive experience buying your first home, let your Santa Rosa mortgage lender and real estate agent know that by recommending them to a friend or colleague. Real estate agents and mortgage lenders today are working harder than ever to ensure your purchase transaction will close successfully. Because they are paid on commission, they have a vested interest in making sure your transaction closes on time.
If you are a first-time home buyer and are looking for a mortgage loan to purchase property in Sonoma County or any of the surrounding areas, start here by getting a free mortgage rate quote. Let’s discuss the steps to buying a home and where to begin for you.