Buying a new home is exciting and a big commitment, both emotionally and financially. These 10 steps of the home buying process can help you make the best decision possible so you can purchase with confidence:.
- Step 1: Find a Mortgage Lender. Your mortgage lender can pre-qualify you for a mortgage and provide with the price range you should be looking at in your home search. A pre-qualification letter will be issued to you by your mortgage lender.
- Step 2: Find the right Real Estate Professional. A Realtor ® can help you find important information on homes and the neighborhood that is not easily obtained by the general public. A Realtor’s ® knowledge of the home buying process, negotiating skills, and familiarity of the market area can be valuable to you.
- Step 3: Decide what Characteristics you want in a Home. Meet with your Realtor ® and discuss the desired area in which you would like to live and the characteristics which you are looking for in your new home. This will include the number of bedrooms, bathrooms, size, and style. Think about what is important to you. Do you want an updated kitchen or bathroom or is a landscaped yard very appealing to you?
- Step 4: Market search and Viewing Homes. Your Realtor ® will perform a market search based on the criteria you have provided and will set up showing appointment for homes that are of interest to you. Once you have found the home that meets your needs, your Realtor ® will look at homes sold and homes currently on the market in that neighborhood to help you determine a fair offer. This is called a market analysis.
- Step 5: Make an Offer. You are now ready to make an offer on the home through a purchase agreement. Earnest money can be provided (but is not required) as consideration with the offer. A suggestion is usually about one percent of the purchase price. Your offer is presented to the Seller (mostly likely through the listing Realtor ®). Once you and the seller have agreed on a price, the agreement will be presented to the chosen title company that will help handle the paperwork up to your closing date and will make sure that you become the rightful owner of the property.
- Step 6: Final Mortgage Application and Homeowner’s Insurance. At this point, you can make final application for your mortgage and obtain a homeowner’s insurance quote for your new home.
- Step 7: Set up a Home Inspection (highly recommended). Purchase agreements are contingent on home inspections of the property to check for structural damage or things that may need to be fixed. This contingency provides you with the option to renegotiate items that may have shown up on the inspection or allows you to withdraw the offer if sufficient damages are found within the home. A few days prior to closing on the home, you will have a walk-through that will confirm that any agreed upon repairs have been made.
- Step 8: Appraisal is Ordered by the Mortgage Lender. If the purchase price is greater than the appraisal, the buyer will have the option to renegotiate the purchase price or terminate the offer. (Appraisals are optional for cash transactions, but not required).
- Step 9: Prepare for Closing. Review closing documentation and arrange to have funds available for closing. With help from your Realtor®, lender and the title company, you will be provided with closing documentation that will give an itemized statement of costs to obtain your new home. Once finalized, you will be provided with the amount of funds you will need to bring to closing.
- Step 10: Close and Take Possession of Your New Home. Your closing will be at the Title Company. There you sign the documentation you will need to take ownership of the home, including your mortgage loan documents. After funding and recording of the new owner transfer at the county, you can now change over the utilities into your name and move in. Congratulations!
Whether you are a first time homebuyer or repeat buyer, purchasing a new home is an emotional and financial decision that requires the expertise and guidance of professionals such as a Realtor ®, mortgage lender, title experts and other professional individuals. With the help of these individuals, you can be assured that the process of buying a new home will go smoothly and be very satisfying.
Note: What is a Realtor ®? The term Realtor ® is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of Realtor ® and subscribes to its strict Code of Ethics. Not every real estate broker/agent is a Realtor ®.
Carrie Montoya-Pegg is an Associate Broker at Zia Realty Group. She provides Real Estate Services in Los Alamos, Jemez Springs, Pojoaque and Rio Arriba County. Direct questions regarding this column to her at 505.500.1234 or email@example.com.